NEW YORK (Reuters) - U.S. stocks extended gains for a second day on Tuesday as optimism grew that a solution to the Greek debt problem was near, boosting investor appetite for risky assets.
Buyers snapped up shares that had fallen sharply in the past week, mostly in commodities and technology.
"The fact that we won't be seeing the worst-case scenario is the catalyst for the market that is still very oversold," said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
The S&P energy index surged nearly 2.2 percent, the biggest gainer among S&P sectors. Halliburton Co gained 5.3 percent to $48.66, while Chevron Corp was up 1.2 percent at $100.09.
Brent crude futures rose $2.41 on Tuesday, pushing oil above $108 a barrel as the dollar weakened and optimism grew that Greece would adopt an austerity program.
The Dow Jones industrial average was up 118.64 points, or 0.99 percent, at 12,162.20. The Standard & Poor's 500 Index was up 13.05 points, or 1.02 percent, at 1,293.15. The Nasdaq Composite Index was up 31.99 points, or 1.19 percent, at 2,720.27.
Dailey said about the S&P 500 stock index that 1,285 to 1,300 was a technical range being closely watched.
Greek lawmakers will vote Wednesday and Thursday on the measures, which must be passed to receive the next payment of
12 billion euros. If Greece doesn't get the funds, investors fear a Europe-wide crisis and potential credit market freeze could follow.
Also helping sentiment, progress was reported in talks to persuade European banks and insurers to voluntarily roll over maturing Greek debt.
VIX AND THE GREEK VOTE
While the market was generally optimistic about the vote, some options gauge suggested otherwise.
The CBOE Volatility Index, Wall Street's "fear gauge," was at 19.62, a number considered relatively high.
"While the most recent newswires are predicting that the Greek government has the minimum votes needed (151 out of 300) to pass the austerity plan, the relatively small declines in the VIX this week, given how sharply the US equity markets have rallied, seem to be building in at least some doubt that the measure may fail," said Randy Frederick, director of trading and derivatives at Schwab Center for Financial Research in Austin, Texas.
"If the vote fails it could cause a rally in the dollar versus the euro and that would likely prompt a pullback in the domestic equity markets. Given a gain in the SPX of approximately 1.8 percent in the past two days, I would expect much more than the 6 percent decline we've seen in the VIX, especially given how high it is relative to the past 3 months or so."
Nike Inc surged 7.7 percent to $87.89 a day after reporting fourth-quarter earnings that beat expectations, while orders suggested robust strength for the future.
US STOCKS-Wall St rises after Greece vote, BofA gains
* Pending home sales rise more than forecast in May
* BofA gains after mortgage bond settlement
* BJ's Wholesale up on private equity buyout deal
* Indexes up: Dow, Nasdaq by 0.3 pct, S&P 0.5 pct
* For up-to-the-minute market news see [STXNEWS/US] (Adds quote, pending home sales, updates prices)
By Ryan Vlastelica
NEW YORK, June 29 (Reuters) - U.S. stocks rose on Wednesday after the Greek parliament passed an austerity plan and a mildly encouraging report on pending home sales.
Equities have rallied for two days in a row on optimism the Greece program would pass, with the S&P up more than 2 percent so far this week.
"The vote being passed is a step in the right direction to getting resolution," said David Levy, portfolio manager at Kenjol Capital Management in Austin, Texas. "We've had the issue on the table for some period of time now, and as resolution is reached it will give the market confidence."
The Greek parliament approved a five-year package of spending cuts, tax rises and state asset sales by a comfortable margin in a key step toward securing international funds and preventing the euro zone's first sovereign default. For details, see [ID:nL6E7HT0PS]
U.S. pending home sales rose a stronger-than-expected 8.2 percent in May, but a glut of unsold properties remained a drag on the housing market. The latest data followed a mildly encouraging housing on Tuesday. [ID:nN1E75R1XG]
"The improvement in home sales is encouraging, but this doesn't even begin to solve the structural issues in the sector," said Liam Dalton, president of Axiom Capital Management Inc in New York. "Still, any sign of stability is a victory."
The Dow Jones industrial average .DJI was up 39.81 points, or 0.33 percent, at 12,228.50. The Standard & Poor's 500 Index .SPX was up 6.77 points, or 0.52 percent, at 1,303.44. The Nasdaq Composite Index .IXIC was up 7.55 points, or 0.28 percent, at 2,736.86.
Bank of America Corp (BAC.N) rose 3 percent to $11.15 after it reached a settlement with mortgage bond investors. The $8.5 billion settlement removed a question mark hanging over the bank since October. [ID:nL3E7HT1RJ]
BJ's Wholesale Club Inc (BJ.N) added 4.8 percent to $50.40 after it agreed to a buyout by private equity firm Leonard Green & Partners and another group. [ID:nL3E7HT1RE]
Monsanto Co (MON.N) advanced 4 percent to $69.54 after its quarterly profit topped estimates, while General Mills Inc (GIS.N) edged 0.1 percent higher to $37.26 after the cereal maker forecast weaker fiscal-year earnings than Wall Street expected. [ID:nN1E75R28U] and [ID:nN1E75S02N] (Editing by Jeffrey Benkoe)
