US STOCKS-S&P 500 turns positive for 2009 on bank hopes, data

                                
 * Bank shares leap ahead of stress tests results
                                
 * Data shows pending home sales jump in March
                                
 * S&P 500 index close to break-even for 2009
                                
 * Dow up 2.6 pct; S&P 500 up 3.4 pct; Nasdaq up 2.6 pct
                                
 * For up-to-the-minute market news click [STXNEWS/US]
 (Updates to close)
                                
 By Ellis Mnyandu
                                
 NEW YORK, May 4 (Reuters) - U.S. stocks rallied on Monday,
driving the S&P 500 into positive territory for the year as
investors bet banks' capital shortfalls may be manageable and
housing data fueled hopes the recession is easing.
                                
 Bank stocks were the standouts, with Citigroup <C.N> up
7.7 percent at $3.20 and Bank of America <BAC.N> climbing 19.3
percent to $10.38. Wells Fargo <WFC.N> jumped 23.7 percent to
$24.25, while JPMorgan <JPM.N> shot up 10.2 percent to
$35.79.
                                
 The S&P 500 is now up 34 percent from its 12-year closing
low on March 9. The KBW Bank index <.BKX> leaped nearly 15
percent and is up 88 percent since early March when many
thought the government was on the brink of nationalizing
several big banks.
                                
 Aside from reports suggesting bank balance sheets need
less shoring up than feared just a few months ago, White House
comments that the Obama administration did not see a need
right now to ask Congress for more bank bailouts also pushed
the sector higher. For details, see [ID:nWAT011398]
                                
 "Going into the stress tests, nobody expected anything
positive to come out of this," said Dan Faretta, senior market
strategist at Lind-Waldock, a retail brokerage firm, in
Chicago.
                                
 "If there's a situation where we don't have to ask for
more money, that's going to be very positive for these
markets."
                                
 The Dow Jones industrial average <.DJI> rose 214.33
points, or 2.61 percent, to 8,426.74. The Standard & Poor's
500 Index <.SPX> gained 29.72 points, or 3.39 percent, to
907.24. The Nasdaq Composite Index <.IXIC> climbed 44.36
points, or 2.58 percent, to 1,763.56.
                                
 Although final stress test results are expected to be
released on Thursday, investors bet they would show banks do
not need a larger financial cushion. That outcome would
minimize the dilution of current shareholders' equity and
avoid giving the government a bigger stake in the banks.
                                
 On the economic front, fresh data fueled investors' hopes
that the recession may be easing as pending sales of existing
homes rose unexpectedly in March, sending shares of home
builders higher.
                                
 Lennar <LEN.N> jumped 9.3 percent to $10.34, while Toll
Brothers <TOL.N> gained 6.5 percent to $20.73, and D.R. Horton
<DHI.N>  added 9.1 percent to $13.49.
                                
 The Dow Jones home construction index <.DJUSHB> rose 9
percent.
                                
 The broad S&P 500 turned positive for the year 2009, but
it is still off 42 percent from its October 2007 record high.
                                
 The first-quarter earnings reporting season is winding
down, but Sprint Nextel Corp <S.N> gave investors something to
cheer when it posted a surprising quarterly operating profit.
[ID:nN04347173]. Sprint shares jumped 7.1 percent to $5.
                                
 The burgeoning optimism about the economy underpinned
gains in the shares of big manufacturers, with diversified
manufacturer United Technologies <UTX.N>  up 3.4 percent at
$51.22. Shares of Boeing Co <BA.N> rose 2.3 percent to $42.15
after thebig U.S. aircraft maker reaffirmed maiden flight
plans for its 787 Dreamliner. The stock helped lift the Dow.
                                
 All but one of the Dow's 30 stocks ended in positive
territory.
                                
 On Nasdaq, shares of Apple Inc <AAPL.O> gave the biggestboost, rising 3.8 percent to $132.07.
                                
 Any news that points to more stabilization in the banking
sector will be a positive for stock investors since
authorities have said shoring up the financial system is
essential in reviving the recession-hit economy.
                                
 The government has assessed 19 major U.S. financial
institutions to ensure they have sufficient capital to
withstand the recession.
                                
 Bloomberg reported on Monday that Citigroup is looking to
raise any additional capital it might need from private
investors rather than giving more control to the government.
                                
 The Financial Times, citing people close to the situation,
reported that Bank of America Corp is working on plans to
raise more than $10 billion in fresh capital, but the bank
denied it had such plans. [ID:nN04395186]
 (Editing by Jan Paschal)