U.S. Stocks Post Biggest Three-Day Gain Since March on Greece

U.S. stocks rose, giving benchmark indexes the biggest three-day gain since March, as Greece passed austerity measures and the Federal Reserve moved to set a less- severe limit on debit-card swipe fees than previously proposed.

Visa Inc. (V) and MasterCard Inc. (MA), the biggest consumer-payment networks, jumped more than 11 percent, as the Fed moved to cap debit-card transaction fees at 21 cents. Bank of America Corp. (BAC) advanced 3 percent after agreeing to pay $8.5 billion to resolve claims over soured mortgages. Monsanto Co. (MON), the largest seed company, climbed 5 percent after net income jumped 77 percent. U.S. Steel Corp. paced a rally in steelmakers, rising 5.9 percent, as Deutsche Bank AG predicted demand rebound.

The Standard & Poor’s 500 Index rose 0.8 percent to 1,307.41 at 4 p.m. in New York, adding 3.1 percent in three days. The Dow Jones Industrial Average added 72.73 points, or 0.6 percent, to 12,261.42 today.

Greece is kicking the can down the road,” said Bruce McCain, who helps oversee $22 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland. “That’s certainly an important first step. On top of that, the economy has a number of catalysts that could help push the market higher over the next few weeks. We’ve came down a lot on price. It seems a bit overdone.”

The S&P 500 has fallen 2.8 percent in June, and headed for the second straight monthly loss, amid concern about the European debt crisis and weaker-than-expected economic data. The index is still up 4 percent in 2011 on government stimulus measures and better-than-estimated profits.

Greece’s Package

Global stocks rose for a third day, the longest advance in a month, as Greek Prime Minister George Papandreou clinched enough votes to pass the first part of an austerity plan aimed at meeting European Union aid requirements and staving off default for his debt-laden nation. Papandreou is now on track to secure a bill setting out the strategy for a 78 billion-euro ($112 billion) package of budget cuts and asset sales that is the condition for further rescue funds.

“It relieves a certain amount of uncertainty related to outsized risks that would come with a default,” said Kevin Caron, market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which has $115 billion in client assets. In addition, “it was good to see that home sales rose more than expected. That was a positive sign.”

Housing Data

More Americans than forecast signed contracts in May to buy previously owned homes. The index of pending home resales increased 8.2 percent from April after a revised 11 percent drop the prior month that was smaller than initially reported, the National Association of Realtors said. Economists forecast a 3 percent increase, according to the median estimate in a Bloomberg News survey.

Financial shares had the biggest gain in the S&P 500 within 10 industries, rising 2.1 percent. Visa soared 15 percent, the most since March 2008, to $86.57. MasterCard surged 11 percent to $309.70, the highest since June 2008.

“This is a big win for Visa and MasterCard,” said Giri Cherukuri, lead trader and portfolio manager for Lisle, Illinois-based Oakbrook Investments, which manages about $2.7 billion. “They’ve been arguing for a long time that these regulations are too onerous. Definitely good news for them.”

Bank of America added 3 percent to $11.14. The stock rose even after the bank said its settlement will contribute to a second-quarter loss of $8.6 billion to $9.1 billion, or 88 cents to 93 cents a share.

Citigroup Rallies

Citigroup Inc. (C) advanced 3.4 percent to $41.50. Bank of America raised the stock to “buy” from “neutral,” saying potential earnings should lift the shares.

Gauges of raw material and energy shares in the S&P 500 gained at least 1.1 percent. The S&P GSCI Index of 24 commodities advanced 2.1 percent as oil and metals rallied.

Monsanto climbed 5 percent to $70.26. The world’s largest seed company reported fiscal third-quarter earnings that topped analysts’ estimates and raised its full-year profit forecast on higher sales of Roundup weed killer and genetically modified crop seeds. Profit excluding some items will rise to $2.84 to $2.88 a share in the fiscal year through August. Its previous forecast was for $2.72 to $2.82.

U.S. Steel rallied 5.9 percent, the biggest increase since July 2010, to $45.85. Deutsche Bank AG said demand and prices for the metal will rise. Steel producers in the U.S. will benefit as Chinese inventories empty and industrial activity picks up in the second half of 2011, analysts including David Martin and Jorge Beristain wrote in a research note yesterday.

Higher Ratings

Deutsche Bank raised its ratings on Pittsburgh-based U.S. Steel and AK Steel Holding Corp. (AKS), the third-largest U.S. steelmaker, to “buy” from “hold.”

BJ’s Wholesale Club Inc. (BJ) climbed 4.6 percent to $50.29 as Leonard Green & Partners LP and CVC Capital Partners agreed to buy the warehouse-club chain for $2.8 billion. Its investors will receive $51.25 a share in cash for each common stock they hold, the companies said. That’s 6.6 percent more than the closing price yesterday.

The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, tumbled 9.9 percent, the most since March, to 17.27.

A gauge of homebuilders in S&P indexes slumped 2.3 percent. KB Home (KBH) tumbled 15 percent, the most since September 2008, to $10.08. The Los Angeles-based homebuilder that targets first- time buyers reported a wider second-quarter loss as new orders and revenue decreased amid weak demand for new houses. PulteGroup Inc. declined 3.9 percent to $7.58. D.R. Horton Inc. fell 3.2 percent to $11.37.

To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Cecile Vannucci in New York at cvannucci1@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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