March 24 (Bloomberg) -- U.S. stocks rallied for a second day after JPMorgan Chase & Co. increased its bid for Bear Stearns Cos., reducing risks in financial markets, and sales of existing homes unexpectedly rose.
Bear Stearns, which almost collapsed before the Federal Reserve helped broker a takeover, more than doubled after JPMorgan quadrupled its offer to $10 a share. Tiffany & Co., the world's second-largest luxury jewelry retailer, rallied the most in seven years on better-than-forecast earnings. Monsanto Co., the biggest seed producer, posted its steepest advance since 2001 after UBS AG advised buying the shares.
The Standard & Poor's 500 Index added 20.28 points, or 1.5 percent, to 1,349.79 at 10:27 a.m. in New York. The Dow Jones Industrial Average climbed 187.48, or 1.5 percent, to 12,548.8. The Nasdaq Composite Index gained 50.36, or 2.2 percent, to 2,308.47. More than six stocks rose for every one that fell on the New York Stock Exchange.
``If you have stabilization of financial stocks, if we don't see any more near-bankruptcies, we can have a rally,'' said Tom Wirth, senior investment officer at Chemung Canal Trust Co. in Elmira, New York, which manages $1.8 billion. ``Tiffany is bringing back to focus that the economy still is not that bad off.''
The S&P 500 trimmed its loss for the year to 8 percent and was poised to post its first back-to-back gains of the month. The benchmark index for U.S. equities climbed 3.2 percent last week after the Federal Reserve injected more cash into the banking system and Wall Street's largest securities firms reported earnings that topped estimates.
Asian shares advanced, led by Taiwan's biggest increase in six weeks. All major European markets were closed for a holiday.
Bear Stearns, Tiffany
Bear Stearns climbed $6.75, or 113 percent, to $12.71. JPMorgan will exchange stock worth about $10 for each Bear Stearns share, the New York-based firms said in a statement. Under the terms of the deal the two firms struck March 16, the takeover price had been $2.52, based on last week's closing price.
Tiffany rallied $5.36, or 14 percent, to $43.96 after saying ongoing earnings excluding items were $1.27 in the fourth quarter, six cents better than the average analyst estimate in a Bloomberg survey. Fourth-quarter revenue was $1.053 billion, beating the $1.049 billion average estimate.
Monsanto climbed $8.85, or 9 percent, to $105.98 after the shares were raised to ``buy'' from ``neutral-short term sell'' by analyst Chris L. Shaw at UBS.
Home Sales
Sales of existing homes in the U.S. unexpectedly rose in February for the first time in seven months, easing concern credit restrictions and falling prices would hurt demand.
Purchases increased 2.9 percent to an annual rate of 5.03 million, the National Association of Realtors said today in Washington. The median home price dropped 8.2 percent from February 2007, the most in four decades of record keeping.
D.R. Horton Inc., the second largest U.S. homebuilder, climbed $1.37 to $17.05, leading gains among all 15 builders in S&P indexes.
Goldman Sachs Group Inc., the biggest U.S. securities firm, slipped $2.66 to $176.97. Smaller rival Lehman Brothers Holdings Inc. lost $1.70 to $46.95. Standard & Poor's cut its credit- rating outlook to negative for the two companies. S&P said their profit may fall as much as 30 percent in the coming year.
Lehman Brothers was downgraded to ``perform'' by Oppenheimer & Co.'s Meredith Whitney, the analyst who correctly predicted Citigroup Inc. would cut its dividend this year. A ``protracted challenging capital markets environment'' prompted the analyst to lower her recommendation from ``outperform.''
CIT, Walgreen
CIT Group Inc. rose $1.72, or 18 percent, to $11.25. The commercial finance company that tapped $7.3 billion of emergency credit lines last week climbed after Stifel Nicolaus & Co. said it may be a takeover target.
Walgreen Co. added $1.39 to $38.17. The largest U.S. drugstore chain's second-quarter profit was bigger than analysts estimated because of increased sales of prescription drugs. Walgreen's net income of 69 cents a share beat the average analyst estimate of 67 cents a share in a Bloomberg poll.
Best Buy Co. rose $1.04 to $43.34. The largest U.S. consumer-electronics retailer, which is gaining market share from Circuit City Stores Inc., is benefiting from growth in sales of video-game software, Barron's reported. Best Buy shares may climb to $52 once investors overcome fears of how the retailer will fare in a recession, Barron's reported, citing unnamed analysts.
Circuit City fell 14 cents to $4.24 after being replaced in the S&P 500 by Philip Morris International Inc., which rose $1.35 to $50.50. HCP Inc. rose $1.29 to $33.03 after replacing Commerce Bancorp Inc. in the index.
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