U.S. Stocks Pare Gains as Berlusconi Wins Vote

By Rita Nazareth - Nov 8, 2011 9:45 PM GMT+0700

U.S. stocks rose, sending benchmark gauges higher for a second day, as Italian lawmakers prepared to vote on Prime Minister Silvio Berlusconi’s budget.

Bank of America Corp. (BAC) and Morgan Stanley increased more than 0.8 percent, pacing gains in financial companies, as European lenders rallied. Activision Blizzard Inc. (ATVI) climbed 3.1 percent after the largest video-game maker released its eighth “Call of Duty” game, “Modern Warfare 3.” Honeywell International Inc. (HON) climbed 1.2 percent after Citigroup Inc. recommended buying the shares of the manufacturing company.

The Standard & Poor’s 500 Index gained 0.4 percent to 1,266.12 at 9:43 a.m. New York time. The benchmark gauge has rallied 1 percent in two days. The Dow Jones Industrial Average added 37.84 points, or 0.3 percent, to 12,106.23 today.

“How many times do you bury the dead?” Stanley Nabi, New York-based vice chairman of Silvercrest Asset Management Group, which oversees more than $10 billion, said in a telephone interview. “We’ve been looking at this European crisis for a while, you get used to the problem. The market’s feeling a sense of relief about Italy. There’s a sense that they are finally trying to get their act together.”

Berlusconi yesterday denied a report in Il Foglio that he is on the verge of resigning to make way for an Italian unity government with a budget-cutting mandate. A test of strength comes today on a normally routine vote to approve last year’s budget report that may show whether Berlusconi still has a majority in the 630-seat house. Should the premier fail to muster 316 votes, he will probably face a confidence vote that will decide his fate.

Under Control

Stocks rose yesterday, following the first weekly retreat in the S&P 500 since September, as the European Central Bank’s Juergen Stark said the region’s debt crisis will be under control in two years. Benchmark gauges dropped last week amid concern Europe’s crisis was worsening as the Group of 20 nations failed to agree on increasing the International Monetary Fund’s resources to fight the crisis.

In Greece, Prime Minister George Papandreou said a national unity government will be named “soon” and told his ministers to get ready to resign, spokesman Elias Mosialos said today in Athens. State-run NET TV said the new prime minister will be former European Central Bank vice president Lucas Papademos, without saying how it got the information.

American banks rallied, following a 2.3 percent jump in a gauge of European lenders. Bank of America increased 1.6 percent to $6.55. Morgan Stanley (MS) rose 0.9 percent to $17.07.

6 Million Copies

Activision Blizzard climbed 3.1 percent to $14.17. “Modern Warfare 3” may sell as many as 6 million copies in the first day, according to Arvind Bhatia, an analyst at Sterne Agee & Leach Inc.

Honeywell increased 1.2 percent to $54.60. Citigroup raised its recommendation for the shares to “buy” from “neutral,” citing attractive valuation relative to peers.

McDonald’s Corp. (MCD) added 0.5 percent to $95.09. The world’s largest restaurant chain said sales at stores open at least 13 months worldwide advanced 5.5 percent last month as customer traffic in Asian nations increased.

DryShips Inc. (DRYS) advanced 4 percent to $2.83. The Greek owner of deep-water drilling rigs and vessels that haul iron ore and coal reported third-quarter earnings excluding some items of 16 cents a share, beating the average analyst estimate by 13 percent.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

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