U.S. Stocks, Oil Gain on Housing Data, IBM Buyback Approval

Oct. 27 (Bloomberg) -- U.S. stocks rose for the first time in three days after International Business Machines Corp.’s board approved $5 billion in additional funds for buybacks and home prices climbed for a third consecutive month.

IBM jumped 1.4 percent and contributed the most to the advance in the Dow Jones Industrial Average. Exxon Mobil Corp. and Chevron Corp. climbed at least 2 percent as crude gained on increased optimism the economy is emerging from the worst recession since the 1930s. Lennar Corp. and Home Depot Inc. advanced after the S&P/Case-Shiller home-price index climbed 1 percent in August from the previous month.

“Earnings are good, we continue to see stabilization in housing prices,” said Mark Bronzo, a money manager at Security Global Investors, which oversees $21 billion in Irvington, New York. “Ultimately, that should give support to the stock market.”

The Standard & Poor’s 500 Index added 0.4 percent to 1,071.01 at 10:49 a.m. in New York. The Dow Jones Industrial Average increased 65.83 points, or 0.7 percent, to 9,933.79.

Benchmark indexes briefly erased gains after the Conference Board’s gauge of consumer confidence unexpectedly decreased in October. The S&P 500 has rallied 58 percent from a 12-year low on March 9 amid growing confidence a U.S. economic recovery will drive profit growth.

IBM led technology shares in the S&P 500 up 0.3 percent after the group fell 1 percent earlier. IBM, the world’s largest computer-services provider, gained 1.4 percent to $121.84

Verizon added 2 percent to $29.20. The second-largest U.S. phone company was raised to “outperform” at Wells Fargo & Co., which said “wireline margins troughed in Q3 and should be a driver of upside going forward.”

Pullback Predicted

Jeremy Grantham, the chief investment strategist at Boston- based Grantham Mayo Van Otterloo & Co., said stocks will “drop painfully from current levels” in the coming year amid disappointing economic data and profits as margins shrink. The benchmark S&P 500 for U.S. equities fell 1.2 percent to 1,066.95 yesterday, higher than Grantham’s estimate for its so-called fair value at 860.

Grantham said his firm has recently reduced equity holdings from a “neutral” 65 percent weighting in its portfolio to 62 percent, leaving “room to pull back further” should markets continue to climb.