US STOCKS-Wall St rallies on GE rating outlook, spending data

                                
 * S&P cuts GE debt rating a notch but outlook stable
                                
 * Bank of America's Ken Lewis adds to bank confidence
                                
 * Dow up 3.5 pct; S&P 500 up 4.1 pct, Nasdaq up 4 pct
                                
 * For up-to-the-minute market news, click [STXNEWS/US]
 (Updates to close)
                                
 By Chuck Mikolajczak
                                
 NEW YORK, March 12 (Reuters) - U.S. stocks rose for a
third day on Thursday on relief that a ratings cut by S&P in
General Electric was just one notch and that no further cuts
loomed, while retail sales data showed some stabilization in
consumer spending.
                                
 Wall Street closed out its best three-day run since the
end of November after GE <GE.N>, the ninth-largest company in
the S&P 500 and viewed as an economic bellwether, jumped
nearly 13 percent to $9.57. Standard & Poor's stripped it of
its AAA rating, citing the expectation for poor earnings at
its finance unit, and assigned a "stable" outlook.
                                
 Investors had feared the credit rating downgrade would be
deeper or the outlook negative. For details see
[ID:nN12349101].
                                
 "The outlook was stable. That's very good news," said Hugh
Johnson, chief investment officer of Johnson Illington
Advisors in Albany, New York. "It wasn't quite as bad as it
could have been."
                                
 Wal-Mart Stores Inc <WMT.N>, up 3.1 percent at $48.94,
ranked among the Dow's top advancers following a government
report that showed sales at U.S. retailers fell by an
unexpectedly small margin in February. [ID:nN12352975]
                                
 The Dow Jones industrial average <.DJI> climbed 239.66
points, or 3.46 percent, to 7,170.06. The Standard & Poor's
500 Index <.SPX> jumped 29.38 points, or 4.07 percent, to
750.74. The Nasdaq Composite Index <.IXIC> added 54.46 points,
or 3.97 percent, to 1,426.10.
                                
 The Dow closed above 7,000 for the first time since Feb.
27, but remains down 46 percent from its record close in
October 2007.
                                
 For the third straight day, comments from a top banker
spurred battered bank shares sharply higher.
                                
 Bank of America <BAC.N> Chief Executive Kenneth Lewis said
the largest U.S. bank was profitable in January and February,
and should be able to ride out the recession without any
additional help from taxpayers. [ID:nN12368897]
                                
 Lewis' comments echoed statements by Citigroup <C.N> and
JPMorgan Chase <JPM.N> executives in the two previous trading
sessions.
                                
 Bank of America's stock surged nearly 19 percent to $5.85
and JPMorgan gained 13.7 percent to $23.20. The KBW banks
index <.BKX> shot up 11.2 percent.
                                
 Investor sentiment also got a lift from a flurry of
takeover activity in the biotechnology sector, driving up
shares of health-care companies. The Amex Biotechnology index
<.BTK> leaped 6 percent.  
                                
 On Nasdaq, biopharmaceutical company Gilead Sciences Inc
<GILD.O> said it will buy CV Therapeutics Inc <CVTX.O> for
about $1.4 billion, stepping in the middle of a hostile bid
for CV from Japan's Astellas Pharma Inc.
                                
 Gilead shares gained 0.9 percent to $44.43, while CV's
shares soared 31.5 percent to $21.04.[ID:nN12351289]
                                
 Shares of peer Celgene Corp <CELG.O> rose 11.7 percent to
$47.16, placing it among the stocks contributing the most to
the Nasdaq's advance. Celgene was the top percentage gainer in
the S&P 500 <.GSPA> health-care index, which rose 5.2
percent.
                                
 Genentech <DNA.N> rose 1.9 percent to $93.92 on the New
York Stock Exchange after Swiss drugmaker Roche Holding AG
<ROG.VX> struck a deal to acquire all of the company's
outstanding shares for $46.8 billion. [ID:nLC266887]
                                
 Dow component Pfizer <PFE.N> advanced 9.6 percent to
$14.02 following news that its drug was effective in slowing a
rare type of pancreatic cancer. [ID:nN12353468]
                                
 Shares of General Motors <GM.N> climbed 17.2 percent to
$2.18 after the automaker said that it will not immediately
need $2 billion in emergency funding for March. Shares of Ford
Motor <F.N> added 7.1 percent to $2.10.
                                
 Trading was active on the New York Stock Exchange, with
about 1.81 billion shares changing hands, above last year's
estimated daily average of 1.49 billion, while on Nasdaq,
about 2.44 billion shares traded, above last year's daily
average of 2.28 billion..
                                
 Advancing stocks outnumbered declining ones on the NYSE by
about 11 to 1, while on the Nasdaq, more than four stocks rose
for every one that fell.
 (Editing by Jan Paschal)