U.S. Stocks Climb on Lower Commodities; GM, Ford, MBIA Advance

By Lynn Thomasson

Aug. 15 (Bloomberg) -- U.S. stocks rose for a second day after lower commodity prices boosted the earnings outlook for consumer and transportation companies and Standard & Poor's affirmed credit ratings on the two largest bond insurers.

General Motors Corp. and Ford Motor Co., the biggest U.S. automakers, climbed as oil headed for a second weekly decline. Ambac Financial Corp. rallied 23 percent and MBIA Inc. advanced 9.5 percent after S&P concluded a credit review without lowering the companies' ratings. General Electric Co. led industrial shares higher on a Federal Reserve report showing manufacturing in New York unexpectedly grew in August as materials prices retreated.

``It's a big positive for all the companies we invest in that use oil,'' Charles Bobrinskoy, who helps manage about $13 billion as vice chairman of Ariel Investments in Chicago, told Bloomberg Television. ``Commodities got way too high and consumer stocks in particular got too low.''

The S&P 500 rose 5.41, or 0.4 percent, to 1,298.34 as of 9:35 a.m. in New York. The Dow Jones Industrial Average increased 69.29, or 0.6 percent, to 11,685.22. The Nasdaq Composite Index added 12.03 to 2,465.7. About five stocks rose for every two that fell on the New York Stock Exchange.

The S&P 500 erased its weekly decline, leaving it little changed on the week. The benchmark for American equities has lost 12 percent this year as surging commodities and credit-market losses curbed profit growth. Earnings have slumped 23 percent on average for the 445 companies in the S&P 500 that released second-quarter results since July 8, according Bloomberg data.

Oil's Retreat

GM, the biggest U.S. carmaker, added 48 cents to $11.83. Ford, the second-largest U.S. automaker, gained 9 cents to $5.19. Crude oil retreated as the stronger dollar diminished the appeal of commodities as an inflation hedge.

The contract for September delivery dropped as much as 2 percent to $112.75 a barrel in New York.

MBIA added 9.5 percent to $11.30. Ambac climbed 23 percent to $5.63. Bond insurers owned by MBIA, Ambac, Syncora Holdings Ltd., FGIC Corp., and CIFG Holdings were stripped of their AAA ratings over the past six months as losses grew from collateralized debt obligations and other mortgage-linked securities.

MBIA Insurance's capital levels remain ``well above the level required for a 'AA' rating,'' S&P said. Ambac Assurance's efforts to cancel protection on mortgage-linked CDOs also ``are starting to bear fruit,'' the firm said.

Financial shares have slumped this year as the worldwide costs for the collapse of the subprime mortgage market exceeded $500 billion.

The Reuters/University of Michigan preliminary survey on consumer confidence for August, due around 10 a.m., may show sentiment rose for a second month after reaching a 28-year low in June.

U.S. stocks rose yesterday after a trade group loosened restrictions on Fannie Mae and Freddie Mac to help revive the mortgage industry. PMI Group Inc., the second-biggest mortgage insurer, rallied 49 percent on plans to raise cash by selling businesses.

To contact the reporters on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.