* Upgrades of Procter & Gamble, home builders lift stocks
* Optimism that economic recovery will sustain profits
* Dow up 0.4 pct, S&P 500 up 0.3 pct, Nasdaq up 0.3 pct (Updates to close)
NEW YORK, Sept 18 (Reuters) - U.S. stocks rose on Friday as Procter & Gamble PG.N and major home builders advanced on positive brokerage comments and investors bet the economic recovery will be strong enough to sustain corporate profits.
The Dow hit a new 11-month high and capped its best week in two months as Citigroup said Procter & Gamble, maker of Tide detergent and Pampers, is poised to win market share through aggressive pricing. For details, see [ID:nBNG419626]
Procter & Gamble's shares rose 3.2 percent to $57.32. The S&P consumer staples index .GSPS, up 1.1 percent, was among the S&P 500's best-performing sectors.
“It’s sort of cautious optimism. What that’s doing is leading to analyst upgrades, and we’re seeing analysts raising earnings estimates for both this year and for calendar 2010 fairly consistently,” said Fred Dickson, market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.
The S&P 500 is up 58 percent since hitting a 12-year closing low in early March, partly because of strong second-quarter earnings and optimism that an economic recovery is gaining traction.
Home builders Toll Brothers Inc TOL.N and KB Home KBH.N both were upgraded by J.P. Morgan Securities, which said the housing sector will continue to recover over the next 24 months and drive the current rally in home builders' stocks. [ID:nBNG182652]
The Dow Jones industrial average .DJI was up 36.28 points, or 0.37 percent, at 9,820.20. The Standard & Poor's 500 Index .SPX was up 2.81 points, or 0.26 percent, at 1,068.30. The Nasdaq Composite Index .IXIC was up 6.11 points, or 0.29 percent, at 2,132.86.
It was the market’s second straight week of gains. This week, the Dow rose 2.24 percent, the S&P 500 gained 2.45 percent and the Nasdaq advanced 2.50 percent.
“Quadruple witching,” the expiration and settlement of four different types of September equity futures and options contracts, seemed “fairly quiet,” Dickson said, though the event sometimes leads to increased volatility.
Oil company Chevron Corp CVX.N also was upgraded.
Credit Suisse said Chevron looks best equipped of the major oil companies to deliver growth “over the coming cycle to 2020.” The stock rose 0.9 percent to $72.64.
Toll Brothers shares rose 3.1 percent to $22.20, while KB Home's stock gained 2.6 percent to $20.21. The Dow Jones U.S. Home Construction index .DJUSHB rose 0.7 percent.
On Nasdaq, Palm Inc PALM.O fell 3 percent to $14.01 a day after the company gave a tepid second-quarter sales forecast and said it plans to sell 16 million shares of common stock. [ID:nN1764442]
Volume was heavy on the New York Stock Exchange, with 2.28 billion shares changing hands, well above last year’s estimated daily average of 1.49 billion, while on the Nasdaq, about 3.16 billion shares traded, also far above last year’s daily average of 2.28 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of 3 to 2, while on the Nasdaq, 14 stocks rose for every 13 that fell. (Editing by Jan Paschal)
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