Sept. 21 (Bloomberg) -- U.S. stocks climbed after earnings from Oracle Corp. topped analysts' estimates and lower interest rates helped revive takeover speculation, sending the market to its biggest weekly gain since March.

Oracle, the world's third-largest software maker, rallied to a six-year high after sales of new products increased. Sprint Nextel Corp. rose the most in almost three months and Estee Lauder Cos. posted its best advance since January as investors increased bets the companies would be acquired.

The S&P 500 increased 7, or 0.5 percent, to 1,525.75. The Dow Jones Industrial Average added 53.49, or 0.4 percent, to 13,820.19. The Nasdaq Composite Index climbed 16.93, or 0.6 percent, to 2,671.22.

Today's advance helped continue a rally spurred by the Federal Reserve's Sept. 18 interest-rate cut. Thirteen of 17 S&P 500 companies that reported results this week beat analysts' estimates, while $14.8 billion in takeovers involving U.S. companies have been announced since the day of the Fed decision.

``Liquidity is back in the market, confidence is returning,'' said Michael Williams, who helps oversee about $3 billion as managing director of Beamreach Trust in New York. ``You'll see more friendly takeovers. That's always a positive for the stock market. Tech is lighting the world on fire, beating estimates every time they turn abound.''

For the week, the S&P 500 and Dow average each climbed 2.8 percent.

Oracle

Oracle advanced 94 cents to $21.98, its highest price since February 2001, after the company posted a 25 percent gain in first-quarter profit to $840 million, exceeding analysts' estimates. Sales of new software licenses, an indicator of future growth, jumped 35 percent, the biggest quarterly advance in a decade. Citi Investment Research raised its price estimate for the shares to $25 from $24, while Credit Suisse Group lifted its projection to $26.

Oracle led an index of software companies to a 1.2 percent gain, the second-steepest among 24 industries. Google Inc., owner of the world's most-used Internet search engine, rose $7.27 to a record $560.10.

``The earnings picture is still going to look pretty good,'' said Jeffrey Davis, who helps manage $4.7 billion as chief investment officer at Lee Munder Capital Group in Boston. ``Technology and growth companies in general are looking very healthy.''

Takeover Speculation

Sprint Nextel climbed 68 cents to $18.69 on renewed speculation the third-largest U.S. mobile phone company may be acquired. ``The rumor is circulating again,'' said Michael Nasto, senior trader at U.S. Global Investors Inc., which manages $5 billion in San Antonio.

Estee Lauder Cos. surged $1.95, or 4.8 percent, to $42.58 for the top gain in the S&P 500. Options trading also increased on bets that the maker of Clinique cosmetics will be acquired.

Alberto-Culver Co. added $1.23, or 5.1 percent, to $25.54. The maker of Alberto VO5 and Tresemme shampoos is an ``attractive'' takeover candidate, a JPMorgan analyst said. Alberto-Culver would ``offer scale to foreign companies that want to gain greater access to the U.S.,'' analyst Dara Mohsenian wrote in a research note.

Texas Instruments Inc., the world's biggest maker of mobile- phone chips, rallied 85 cents to $36.62. The company added $5 billion to its share buyback budget and increased its dividend by 25 percent. Texas Instruments had about $3.8 billion left under its previous buyback plan as of June.

Energy Rally

Energy companies in the S&P 500 climbed 0.6 percent as a group. Natural gas rose in New York as some Gulf of Mexico production was curtailed, and crude oil for November delivery held above $81 a barrel on the New York Mercantile Exchange. The October futures contract reached a record $83.90 yesterday on its last day of trading.

Exxon Mobil Corp., the world's largest publicly traded oil company, gained 22 cents to $92.31. Chevron Corp., the second- biggest U.S. crude producer, added 67 cents to $94.84.

Trading climbed to a record in the first hour of today's session on the New York Stock Exchange, the exchange said in a statement. In the first hour, 805 million shares changed hands, 7.9 percent more than the previous high.

The trading reflected the expiration of futures and options on indexes and individual stocks. So-called quadruple witching occurs once every three months.

S&P 500 Rebalancing

Volume also rose before the quarterly rebalancing of the S&P 500, which took effect after exchanges closed today. Investors who track the indexes must buy or sell shares to reflect the adjustments and some hedge funds may seek to profit from changes in demand for index members' stocks, according to David Xiao, head of U.S. portfolio trading strategies at Citi Investment Research.

About three stocks gained for every two that fell on the NYSE.

Harman International Industries Inc. plummeted $27.25, or 24 percent, to $85. The maker of Harman Kardon and JBL audio equipment said Kohlberg Kravis Roberts & Co. and Goldman Sachs Group Inc. won't complete the $8 billion purchase of the company. KKR and Goldman believe Harman breached the merger agreement and don't think they are obligated to complete the purchase, Harman said today in a statement. Harman says it disagrees that ``a material adverse change'' occurred.

Tektronix Inc. slid $2.69 to $29.61. The maker of test equipment for electronics manufacturers said it expects second- quarter profit from continuing operations of 38 to 42 cents a share, less than the 44-cent average estimate of analysts surveyed by Bloomberg. The company forecast sales of $270 million to $280 million, also missing analysts' estimates.

3Com Drops

3Com Corp. fell 16 cents to $3.58. The maker of computer- networking equipment, which hasn't turned a profit in seven years, said its first-quarter loss widened on costs to buy out a venture partner in China.

In currency markets, the dollar headed for the biggest weekly loss since November 1988 against the Canadian dollar, falling 3 percent. The U.S. currency lost 1.6 percent this week against the euro and set a record low today on speculation the Fed will cut rates further to spur growth.

``It makes our equities look cheaper to a foreign investor,'' said Bartley Barnett, head of listed trading at Morgan Keegan Inc. in Memphis, Tennessee. ``A weak dollar spurs U.S. exports as well.''

The cost of overnight borrowing in pounds and dollars dropped, indicating central bank efforts to ease a drought in short-term credit may be working.

Libor

The London interbank offered rate that banks charge each other for overnight loans in pounds fell for a fourth day, declining 7 basis points to 5.75 percent, according to the British Bankers' Association. The Libor rate for dollars dropped 4 basis points to 4.90 percent, a third straight decline. A basis point is 0.01 percentage point.

In the bond market, the 10-year Treasury note's yield fell 7 basis points to 4.63 percent.

The Russell 2000 Index, a benchmark for companies with a median market value of $672 million, gained 0.4 percent to 813.11. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, rose 0.4 percent to 15,338.94. Based on its advance, the value of stocks increased by $84.1 billion.

3Com Corp. (COMS US)
Alberto-Culver Co. (ACV US)
Chevron Corp. (CVX US)
ConocoPhillips (COP US)
Estee Lauder Cos. (EL US)
Exxon Mobil Corp. (XOM US)
Harman International Industries Inc. (HAR US)
Oracle Corp. (ORCL US)
Sprint Nextel Corp. (S US)
Tektronix Inc. (TEK US)
Texas Instruments Inc. (TXN US)

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.

Last Updated: September 21, 2007 17:29 EDT