U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a third day, as better- than-estimated jobless claims, consumer confidence and leading indicators bolstered optimism in the world’s largest economy.

Financial shares had the biggest gain in the S&P 500 among 10 industries as Morgan Stanley (MS), Citigroup Inc. (C) and Bank of America Corp. (BAC) jumped more than 5 percent. General Electric Co. (GE) and Exxon Mobil Corp. (XOM) added at least 1.9 percent, pacing gains among companies most-tied to economic growth. Akamai Technologies Inc. surged 18 percent after agreeing to buy Cotendo to expand (AKAM) Internet-based and mobile services.

The S&P 500 rose 0.9 percent to 1,255.12 at 1:54 p.m. New York time. The benchmark index for American equities added 4.1 percent in three days. The Dow Jones Industrial Average gained 72.58 points, or 0.6 percent, to 12,180.32 today.

“The U.S. economy is a lot stronger than people think,” Philip Orlando, the New York-based chief equity market strategist at Federated Investors Inc., said in a telephone interview. His firm oversees about $355 billion. “Investors are scared to death about what’s going on in Europe. You’ve got to separate domestic economic fundamentals, which are in good shape, from the negative psychological overhang. We’re in the decoupling camp. The bears will be proven wrong.”

The three-day rally in the S&P 500 trimmed this year’s decline to 0.2 percent. The index was still down 8 percent from this year’s high in April, joining a global rout in equities, as concern about Europe’s debt crisis overshadowed better-than- estimated American economic data.

Economic Data

Stocks rose today as the number of applications for unemployment benefits unexpectedly dropped last week to the lowest since April 2008. Confidence among U.S. consumers rose more than forecast in December, to a six-month high, according to the Thomson Reuters/University of Michigan sentiment index, as Americans began wrapping up their holiday spending. The index of U.S. leading indicators climbed more than estimated in November, a sign that the economy will keep growing in 2012.

“We’re definitely muddling through in the U.S.,” Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston, said in a telephone interview. “It may not be a bullish case, but the jobs situation is less grim than it was. You still have to be wary that a significant recession in Europe could pull the rest of the world into a global recession, including the U.S.”

Nine out of 10 groups (SPXL1) in the S&P 500 rose as gauges of financial and commodity shares added at least 1.1 percent. The Morgan Stanley Cyclical Index rallied 1.5 percent amid economic optimism. GE jumped 3.5 percent to $18.13. Exxon Mobil increased 1.9 percent to $84.71.

Banks Rally

The KBW Bank Index gained 3.2 percent. Morgan Stanley added 5.8 percent to $15.78. Citigroup gained 6.9 percent to $27.90. Bank of America advanced 5 percent to $5.49. JPMorgan Chase & Co. (JPM) rose 3.8 percent to $33.53.

Akamai surged 18 percent to $31.35. Cotendo, founded in 2008 and based in Sunnyvale, California, has about 100 employees, half of them in Israel, where the company has a technology center, according to a statement today.

Micron Technology Inc. (MU) soared 17 percent to $6.49. The largest U.S. maker of computer-memory chips was raised to “outperform” from “neutral” at Wedbush Securities Inc. The 12-month price estimate is $8 a share.

Bed Bath & Beyond Inc. (BBBY) fell 7.3 percent to $56.97. The home furnishings retailer reported third-quarter sales of $2.34 billion, below the average analyst estimate of $2.35 billion in a Bloomberg survey.

Baby Formula

Mead Johnson Nutrition Co. (MJN) plunged 13 percent to $66.31. The maker of the Enfamil baby formula plunged after Wal-Mart Stores Inc. pulled a batch of the product from stores after a baby who had taken the formula died from a bacterial infection.

American Greetings Corp. (AM) sank 24 percent to $12.97. The second-largest U.S. maker of greeting cards posted third-quarter earnings of 50 cents a share excluding some items, missing Northcoast Research’s estimate of 81 cents a share.

The S&P 500 is poised for a breakout as the proportion of investors expecting the market to stay in a range rose to a six- year high, said Michael Shaoul of Marketfield Asset Management.

The fluctuation of the benchmark index, which has been stuck in a 233-point band since Aug. 1, has turned more investors neutral as optimism about the American economy offset concern that Europe’s debt crisis will slow global growth. A weekly survey from the American Association of Individual Investors, released today, showed 38 percent of the respondents expected the market to be little changed over the next six months, the highest ratio since April 2005.

‘Weary’

“It may indicate that retail investors have finally grown weary of responding to the market’s movements and have resigned themselves to a range-bound market,” Shaoul, chairman of Marketfield in New York, wrote in an e-mailed note. “Given the tendency of extreme readings to serve as contrary indicators, we cannot help wonder whether a surge in Neutral answers will presage the end of this five-month trading range (SPX), with our money being on an upside breakout if one were to occur.”

AAII’s survey showed 28 percent of respondents were pessimistic while bulls accounted for 34 percent. Investors who expected the market to be flat jumped from 26 percent last week, for the biggest increase since November 2010, according to data compiled from Bloomberg.