U.S. Stocks Rise as Buffett's Advice Offsets Housing Data

By Eric Martin

Oct. 17 (Bloomberg) -- U.S. stocks rose and the Standard & Poor's 500 Index extended its best weekly gain since 2003 as Warren Buffett's advice to buy shares and Google Inc.'s earnings offset a report showing the housing slump worsened.

Google, owner of the most popular search engine, jumped 6.6 percent after topping analysts' profit estimates. D.R. Horton Inc. and Meritage Homes Corp. led a gauge of builders lower on a Commerce Department report that construction of single-family homes plunged to the lowest level in a quarter century. The Dow Jones Industrial Average recovered from a decline of 261 points as the expiration of options also spurred volatility amid the wildest month for market swings since 1929.


``I've been buying American stocks,'' Buffett, the world's second-richest person, wrote in a New York Times column. ``A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors.''

The S&P 500 climbed 6.09 points, or 0.6 percent, to 952.52 at 11:11 a.m. in New York. The Dow Jones Industrial Average added 44.44, or 0.5 percent, to 9,023.7. The Nasdaq Composite Index rose 13.95 to 1,731.66.

The S&P 500 has climbed 5.7 percent this week as money- market rates dropped and prospects of a government bailout of bond insurers lifted financial shares. The index is still down 35 percent in 2008 as losses and writedowns from mortgage- related investments at banks worldwide swelled to $660 billion. The Dow has added 6.7 percent this week.

Investors were whipsawed this week as governments injected $2 trillion to bail out banks amid growing signs the credit crisis will spur a contraction in the global economy. The S&P 500 posted its biggest gain since the 1930s on Oct. 13, before plunging the most since the crash of 1987 on Oct. 15 as retail sales had their steepest drop in three years.

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.