Nov. 6 (Bloomberg) -- U.S. stocks gained, overcoming the first unemployment rate exceeding 10 percent since 1983, as analyst upgrades of General Electric Co. and Macy’s Inc. helped spur optimism that the economy is recovering. Gold reached a record above $1,100 an ounce.

GE gained the most in the Dow Jones Industrial Average, surging 6.2 percent as analysts said risks to its finance unit have diminished. Macy’s fell 6.4 percent after JPMorgan Chase & Co. said the second-biggest U.S. department store chain probably beat analysts’ third-quarter profit estimates. The Standard & Poor’s 500 Index rebounded from a 0.7 percent drop after the government said companies cut 190,000 jobs last month.

The S&P 500 climbed 0.3 percent to 1,069.30 at 4 p.m. in New York and added 3.2 percent this week after rising every day. The Dow added 17.46 points, or 0.2 percent, to 10,023.42. Oil fell 2.8 percent to $77.43 a barrel in New York. Gold jumped to a record $1,101.90 an ounce in New York, and 10-year Treasuries rose, sending yields down 0.03 percentage point to 3.50 percent.

“Stocks rising in the face of the unemployment data is a recognition that we’re probably close to the peak in that number,” said Mark Bronzo, a money manager at Security Global Investors, which oversees $21 billion in Irvington, New York. “It’s a bad number, but people are thinking it may not get a lot worse.”

Market Rebound

Payrolls fell by 190,000 workers last month, compared with a 175,000 drop anticipated by the median forecast of economists surveyed by Bloomberg News, the Labor Department said. The S&P 500 dropped when the U.S. stock market opened following the bigger-than-estimated decrease in October payrolls and the unemployment rate jumping to a 26-year high of 10.2 percent.

The market rebounded after the first half hour of trading as some investors shifted their focused to data showing companies cut 91,000 fewer jobs in August and September than originally reported and stepped up hiring of temporary workers, a trend some economists say may signal an end to U.S. job losses in coming months.

An increase in temporary workers “is oftentimes looked at as the canary in the coal mine in this data series,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which manages about $98 billion in client assets. “It’s obviously easier to hire and fire temporary workers on short-term notice than retain full-staffed, fully employed workers.”

58% Surge, $11.6 Trillion

The S&P 500 has soared 58 percent from a 12-year low in March after $11.6 trillion in government spending, lending and guarantees returned the economy to growth following a year of contraction. The benchmark index for U.S. stocks posted its first monthly decline since February in October as decreases in consumer confidence and spending raised concern over the durability of the economic recovery.

GE rose 6.2 percent, the most since Sept. 16, to $15.33. Analysts from Sanford C. Bernstein & Co. and Oppenheimer & Co. raised their ratings and share-price estimates for the owner of NBC Universal and GE Capital.

“The risk/reward balance has improved enough to warrant a more positive stance,” Bernstein’s Steven Winoker wrote in a note to clients.

Macy’s led a measure of retailers in the S&P 500 to a 1.7 percent advance, the second-best performance among 24 industries. JPMorgan analysts boosted the company’s rating to “overweight” from “neutral.”

Amazon, Gold

Amazon.com Inc. added 4.6 percent to $126.20. The largest Internet retailer was raised to “outperform” from “market perform” at Sanford C. Bernstein, which also raised its price estimate for the company to $160 a share. Amazon will see “revenue re-acceleration,” improved operating margins and increased free cash flow, analysts led by Jeffrey Lindsay wrote in a note today.

Lowe’s Cos. rose 4.3 percent to $20.94 and Home Depot Inc. added 1.8 percent to $26.08 after both companies were raised to “buy” from “underperform” at Bank of America Corp.

Gold rose as high as $1,101.90 an ounce, heading for a ninth straight annual gain, as investors seek to protect their wealth from the threat of inflation and the debasement of the U.S. currency.

American International Group Inc. tumbled 9.7 percent to $35.48, driving financial stocks to the steepest decline among 10 industries in the S&P 500. The insurer bailed out by the U.S. government posted sales declines at its property-casualty and life insurance divisions.

Slot Machines

International Game Technology rose the most in the S&P 500, adding 8.7 percent to $20.18. The world’s biggest maker of slot machines posted profit excluding some items of 20 cents a share in the fiscal fourth quarter, beating the average analyst estimate by 23 percent, according to Bloomberg data.

Earnings have exceeded the average analyst estimate for 83 percent of the S&P 500 companies that have reported third- quarter results since Oct. 7, according to data compiled by Bloomberg. That would mark the highest full-quarter proportion in data going back to 1993.

Energy stocks in the S&P 500 lost 0.2 percent as oil and natural gas dropped. Gas for December delivery lost 3.9 percent to $4.595 per million British thermal units.

“Energy demand is going to be muted with lower industrial activity and consumers driving less, etc., etc.,” said Jeffrey Schappe, who helps manage $17 billion as chief investment officer at BB&T Asset Management Inc. in Raleigh, North Carolina.

Slumping Demand

Sunoco Inc. led declines in energy stocks, dropping 9.4 percent to $28.21 for the second-biggest drop in the S&P 500. The largest refiner in the U.S. northeast reported a third- quarter loss after slumping fuel demand prompted the company to cut rates on processing units, idle a refinery and scale back its pension program. Tesoro Corp. lost 5 percent to $13.97.

Dynegy Inc., the Houston-based power producer that climbed the most since Aug. 10 yesterday, fell 5.9 percent to $1.93.

The Reuters/Jefferies CRB Index of raw materials including grains, energy and precious metals fell for a second day, losing 1.8 percent. The Dollar Index, a six-currency gauge of the greenback’s strength, rose 0.1 percent to 75.777 at 4:41 p.m. in New York.

Nvidia Corp. added 7.3 percent to $13.16. The maker of graphics chips reported third-quarter profit excluding some items of 19 cents a share, beating the 10-cent average of analyst estimates compiled by Bloomberg.

Treasuries rose, reinforcing expectations the Federal Reserve won’t raise interest rates for an extended period. Yields on the two-year note, most sensitive to rate changes, fell to 0.8321 percent, the lowest since May 21.

“People are snapping up Treasuries,” said Peter Jankovskis, who helps manage about $1.5 billion as co-chief investment officer at Oakbrook Investments in Lisle, Illinois. The Treasury will sell $81 billion of notes and bonds next week.

The Chicago Board Options Exchange, a measure of stock- market volatility known as Wall Street’s fear gauge, dropped for a fifth straight day. The VIX, as the benchmark for U.S. stock options is known, lost 4.9 percent to 24.19 as investors paid less for protection against declines in equities.

To contact the reporters on this story: Sapna Maheshwari in New York at smaheshwar11@bloomberg.net; Lynn Thomasson in New York at lthomasson@bloomberg.net.

Last Updated: November 6, 2009 16:46 EST