June 15 (Bloomberg) -- U.S. stocks rallied for a third day after a measure of consumer prices increased less than forecast in May, easing concern inflation will spur higher interest rates.
Intel Corp., the world's largest maker of computer chips, rose after Goldman Sachs advised clients to buy the shares. Home Depot Inc., the biggest home-improvement retailer, gained on speculation it will sell a unit for $10 billion. Utilities and telephone companies climbed for a third day after a decline in bond yields made their dividends more attractive.
The 0.1 percent rise in so-called core prices, which exclude food and energy, followed data this week showing retail sales advanced at twice the forecast rate. Signs the economy is growing without stoking inflation helped stocks erase declines prompted by a five-week jump in bond yields.
``Inflation measures are starting to subside, and future growth is accelerating,'' said Keith Wirtz, who helps oversee $23 billion as chief investment officer at Fifth Third Asset Management in Cincinnati. ``Those are great ingredients for stock investors.''
The Standard & Poor's 500 Index added 12.13, or 0.8 percent, to 1535.1 at 11:30 a.m. in New York. The Dow Jones Industrial Average surged 113, or 0.8 percent, to 13,666.72, pushing the 30-stock gauge to its biggest three-day rally in a year. The Nasdaq Composite Index advanced 27.10, or 1 percent, to 2626.51.
All prices paid by consumers rose 0.7 percent in May for the biggest increase since September 2005, led by a jump in gasoline costs, the Labor Department said. Growth in core prices slowed from April's 0.2 percent. Economists expected the core index to stay at that level in May.
Home Depot, Intel
Home Depot gained 55 cents to $38.34. The company will receive offers for its contractor-supplies unit from two groups, people familiar with the negotiations said. A spokeswoman for the Atlanta-based retailer wouldn't comment.
Intel rose 82 cents to $24.05, the highest price in 1 1/2 years. Goldman, Sachs & Co. upgraded shares of the world's largest chipmaker to ``buy'' from ``neutral'' and said Intel should benefit from rival Advanced Micro Devices Inc.'s likely decision to farm out production.
Utilities gained the most in the S&P 500 as the yield on the benchmark 10-year Treasury note fell about 4 basis points, or 0.04 percentage point, to 5.18 percent. As a group, utility companies return 2.95 percent in dividends, the second-highest among industries in the S&P 500. Shares of telephone companies, whose 2.97 percent yield is biggest, gained 0.5 percent.
Nymex Bids
Nymex Holdings Inc. surged to a record after two people familiar with the discussions said the largest energy market is exploring a sale. The company may be worth $155 a share, or $14.3 billion, 11 percent more than yesterday's closing price, said one of the people. The shares gained $5.21 to $145.01.
The three potential bidders are NYSE Euronext, Deutsche Boerse AG and Chicago Mercantile Exchange Holdings Inc., said the people who asked not to be identified because the talks are confidential. Spokesmen for Nymex and the three suitors declined to comment.
Trading was above average today because futures and options on stock indexes and individual stocks expire. So-called quadruple witching occurs once every three months. In the first 15 minutes of trading, 455 million shares changed hands on the New York Stock Exchange, five times the 89.4 million in the same period yesterday.
Shares of casino companies surged after Penn National Gaming Inc., the owner of casinos and horse racing tracks, agreed to be acquired by buyout firm Fortress Investment Group LLC for $6.1 billion. Investors will get $67 a share in cash, Penn National said. Penn National gained $10.63 to $61.77. Fortress lost $1.09 to $24.02.
Boyd Gaming Corp. jumped $2.65 to $52.45. Isle of Capri Casinos Inc. rose $1.86 to $24.50.
Teleflex, Monsanto
Teleflex Inc., the maker of surgical instruments, car parts, and boat engines, rose to its highest price after saying it plans to buy back as much as $300 million of its shares, or about 9.5 percent of its stock outstanding. The shares gained $3.43 to $83.21.
Monsanto Co., the world's biggest seed producer, rose $2.65 to a record $65.96 after boosting its profit forecast for the fiscal year on increased demand for corn seed and crop chemicals. Profit will be $1.75 to $1.80 a share, compared with a previous forecast of $1.60 to $1.65 a share, the company said.
Shares of PPL Corp., owner of Pennsylvania's second-biggest utility, added $1.66 to $46.37 after the finance committee of its board of directors authorized a $750 million share buyback.
Novartis AG's American depositary receipts, each representing one share, gained $1.35 to $56.31. Europe's third- largest drugmaker said a study showed its Prexige painkiller reduced blood pressure in people with osteoarthritis.
Economy Watch
U.S. stocks rallied for a second day yesterday, boosted by energy companies, as oil climbed to a nine-month high.
In other economic reports today, the Fed Bank of New York's manufacturing index jumped to 25.8 from 8.0. That's more than double the median economist estimate compiled by Bloomberg.
Confidence among U.S. consumers dropped to 83.7 this month, the lowest since August, reported the Reuters/University of Michigan's preliminary index of sentiment. Last month, the survey reported 88.3.
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