April 18 (Bloomberg) -- U.S. stocks rose, sending the Standard & Poor’s 500 Index to its steepest six-week gain since 1938, as profits at Goldman Sachs Group Inc. and JPMorgan Chase & Co. ignited a rally in bank shares.

Bank of America Corp., the largest U.S. lender, and JPMorgan, the second-biggest, helped lead the advance. American Express Co., the largest U.S. credit-card company by purchases, climbed 16 percent after saying growth in bad loans slowed. Express Scripts Inc., the third-biggest manager of U.S. drug benefits, jumped 22 percent following its agreement to buy WellPoint Inc.’s pharmacy-benefit management unit.

The S&P 500 has surged 29 percent since reaching a 12-year low on March 9, posting its first six-week gain since May 2007. That’s the steepest advance since 1938, according to data compiled by Bloomberg. More than $12 trillion in government spending to fix the financial system and revive the economy pushed banks up 83 percent since March 6, paring the S&P 500’s decline for 2009 to 3.7 percent from as much as 25 percent.

“Broadly, through a number of banks, we’re seeing signs of stabilization,” said Timothy Ghriskey, chief investment officer at Solaris Asset Management LLC, which manages $2 billion in Bedford Hills, New York. Based on “what we’re seeing from earnings so far and from management comments, we’re increasingly optimistic.”

The S&P 500 rose 1.5 percent to 869.60. The Dow Jones Industrial Average climbed 47.95 points, or 0.6 percent, to 8,131.33. The Russell 2000 Index of small companies added 2.4 percent to 479.37.

Financial Stocks Rally

Financial companies rose 4.1 percent as a group. E*Trade Financial Corp., the online brokerage firm whose shares fell as much as 98 percent from their 2006 peak, surged 91 percent to $2.58 for the index’s biggest gain.

Huntington Bancshares Inc., the Ohio-based lender whose shares slumped 96 percent from a 2005 peak to $1.02 in March, rose 81 percent to $3.89. Regions Financial Corp., Alabama’s biggest bank, climbed 68 percent to $7.23 after its chief executive said April 16 the company would report a profit for the first quarter instead of the loss projected by analysts.

Citigroup Inc., once the biggest U.S. bank by assets and market value, jumped 20 percent to $3.65 for the biggest rise in the Dow average. Citigroup, which received $45 billion from the federal government to ensure its survival, ended a five-quarter losing streak with a $1.6 billion profit on trading gains and an accounting benefit for companies in distress.

GE Advances

General Electric Co. rose 9.4 percent to $12.39 after reporting first-quarter profit that declined less than analysts estimated. Tax credits and increased earnings from power- generation equipment and jet engines limited the drop to 35 percent.

Citigroup and GE “are pillars of our nation’s economy,” said Lawrence Creatura, a Rochester, New York-based money manager at Federated Investors Inc., which oversees $407 billion. “Investors were expecting absolute disaster.”

Goldman Sachs’s profit of $3.39 a share exceeded the most optimistic Wall Street estimates. Shares of the sixth-biggest U.S. bank by assets closed at a six-month high of $130.15 on April 13. They slumped 12 percent the next day after Goldman Sachs sold $5 billion of new shares to help repay $10 billion of government rescue funds. The shares fell 3 percent to $120.60 for the week.

JPMorgan rose 1.6 percent to $33.26 after reporting. The firm reported first-quarter profit of 40 cents a share as fixed- income trading revenue rose to a record. The bank raised $3 billion in its first dollar-denominated debt sale without the backing of the U.S. government since August.

Earnings Reports

Bank of America, among the 144 S&P 500 companies scheduled to report first-quarter results next week, rose 11 percent to $10.60. The group also includes International Business Machines Corp., Caterpillar Inc., McDonald’s Corp., Microsoft Corp. and 3M Co.

Johnson & Johnson added 3.2 percent to $53.05. The world’s largest maker of health-care products announced first-quarter profit that beat analysts’ estimates with the help of job cuts and sales of consumer products, led by Listerine mouthwash and Neutrogena skin cleansers.

Profits at S&P 500 companies probably declined 38 percent from a year earlier, according to analysts estimates compiled by Bloomberg. That would extend the earnings slump to a record seventh quarter.

American Express climbed 16 percent to $21.81. Charge-offs for managed consumer accounts rose at a slower pace in March as it sold soured loans to investors.

Purchase Adds Customers

Express Scripts rose 22 percent to $59.75. Its purchase of the WellPoint unit for $4.7 billion will add about 25 million customers.

The cost of using U.S. stock options as insurance against declines in the S&P 500 fell to an almost seven-month low. The VIX, as the Chicago Board Options Exchange Volatility Index is known, retreated 7.1 percent to 33.94, the lowest since Sept. 25.

Genworth Financial Inc. fell 16 percent to $2.30 for the third-biggest drop in the S&P 500. The seller of life insurance and mortgage coverage failed to qualify for a capital injection from the U.S Treasury.

General Growth Properties was suspended from trading on the New York Stock Exchange after the second-largest shopping mall owner filed the biggest real-estate bankruptcy in U.S. history. The company sought protection from creditors after failing to refinance its debt. General Growth tumbled 35 percent to 62 cents.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

Last Updated: April 18, 2009 08:00 EDT