* Investors await final results of stress tests this week
* Data shows existing home sales rose in March
* Sprint results beat expectations, shares rise
* Dow up 1.8 pct, S&P up 2 pct, Nasdaq up 1.5 pct
* For up-to-the-minute market news click []
(Updates to midday)
By Leah Schnurr
NEW YORK, May 4 (Reuters) - U.S. stocks rose on Monday on
bets the government's stress tests on the financial sector
won't force banks to raise as much capital as originally
thought and housing data reinforced hopes the economic slump
is easing.
Fresh data gave investors more reasons to buy some stocks
after pending sales of existing homes rose unexpectedly in
March, which lifted shares of home builders, including Lennar
<LEN.N>, up 8.9 percent at $10.30. For details, see
[]. The Dow Jones home construction index
<.DJUSHB> rose 7.3 percent.
"Investors are buying into the incremental improvement
story and as long as that remains, that'll be something that
will prop up stock prices," said Bucky Hellwig, senior vice
president at Morgan Asset Management in Birmingham, Alabama.
With the final stress test results expected to be released
on Thursday, investors hoped banks that do need to raise
capital will be able to do so without converting the
government's preferred shares into common stock, which would
avoid giving the government a bigger stake in the banks.
The Dow Jones industrial average <> climbed 149.89
points, or 1.83 percent, to 8,362.30. The Standard & Poor's
500 Index <.SPX> gained 17.26 points, or 1.97 percent, to
894.78. The Nasdaq Composite Index <> rose 24.94 points,
or 1.45 percent, to 1,744.14.
The broad S&P 500 is at its highest level since early
January and is less than 1 percent away from turning positive
for the year. Since the March 9 bear market closing low, the
index is up 32.5 percent.
With earnings season slowing down, Sprint Nextel Corp
<S.N> was among the standouts. Sprint's stock jumped 12.4
percent to $5.25 after it posted a surprising profit as it cut
costs and had growth in prepaid subscribers. [].
Shares of General Motors <GM.N> rose 1.7 percent to $1.84
after Italy's Fiat SpA <FIA.MI> said it could seek a merger of
its auto group with GM's European unit, then spin off and list
the combined entity. [].
Separately, GM said it has a number of potential buyers
for its Saturn brand and will look to secure an agreement
later this year. []. Struggling GM is in the
midst of restructuring in order to avoid bankruptcy.
Citigroup Inc <C.N> is looking to raise any additional
capital it might need from private investors rather than
giving more control to the government, Bloomberg reported.
[]. Citigroup's stock rose 4.7 percent to $3.11.
The Financial Times, citing people close to the situation,
reported that Bank of America Corp <BAC.N> is working on plans
to raise more than $10 billion in fresh capital, but the bank
said it had no plans to do so and that it has not received a
final figure from the Federal Reserve. [].
Bank of America rose 5.4 percent to $9.17 while the KBW
Bank index <.BKX> gained 6.2 percent.
The government has assessed 19 major U.S. financial
institutions to ensure they have sufficient capital to
withstand the recession. The results are anticipated to show
banks must raise possibly $150 billion or more in fresh
capital. The stocks of the neediest banks are likely to take a
hit.
(Editing by Jan Paschal)
