Nov. 7 (Bloomberg) -- U.S. stocks rose, halting a two-week retreat, after worker productivity, manufacturing and home sales beat economists’ projections and Warren Buffett’sBerkshire Hathaway Inc. made its biggest purchase.

General Electric Co. climbed 7.5 percent, the most in the Dow Jones Industrial Average, and Lennar Corp. led homebuilders to the steepest advance in three months. Burlington Northern Santa Fe Corp. soared 29 percent after Buffett agreed to buy the second-biggest U.S. railroad in what he called an “all-in wager on the economic future of the United States.” Black & Decker Corp. jumped 29 percent after Stanley Works said it would purchase the largest maker of power tools.

The Standard & Poor’s 500 Index climbed every day this week, rising 3.2 percent to 1,069.30. The Dow average gained 310.69 points, or 3.2 percent, to 10,023.42. The Russell 2000 Index climbed 3.1 percent to 580.35.

“The ability of the market to rally on the heels of the M&A activity and pretty solid earnings reports has been encouraging,” said Eric Mintz, who helps manage $2 billion at Eagle Asset Management in St. Petersburg, Florida. “The recent pullback certainly appears to have reversed itself.”

More than 80 percent of S&P 500 companies that have reported third-quarter results beat analysts’ predictions, including Kraft Foods Inc. and Cisco Systems Inc. this week. That exceeds the record pace of 72.3 percent for the period ended in June, data compiled by Bloomberg show.

GE Advances

All 10 industries in the S&P 500 rose this week, helping the index pare its decline from a one-year high on Oct. 19 to 2.6 percent. The U.S. equity benchmark has climbed 58 percent from a 12-year low in March on mounting evidence that the deepest recession since the 1930s is ending.

GE, the world’s biggest maker of jet engines and locomotives, rose 7.5 percent to $15.33. The Institute for Supply Management’s factory index climbed to 55.7 in October as U.S. manufacturing expanded at the fastest pace in more than three years. United Technologies Corp., the maker of Otis elevators and Pratt & Whitney jet engines, gained 5.9 percent to $65.07.

GE also increased after analysts from Sanford C. Bernstein & Co. and Oppenheimer & Co. raised their ratings and target prices for the stock, citing diminished risks at the finance unit and steady performance the infrastructure divisions.

Homebuilders Rise

An index of homebuilders in the S&P 500 climbed 8.9 percent, the most in three months. The number of contracts to buy previously owned homes rose in September for an eighth month, according to data from the National Association of Realtors.

Lennar climbed 12 percent to $14.14. The third-largest U.S. homebuilder was raised to “outperform” from “neutral” at Credit Suisse Group AG, which said it will probably report improving operating profits in 2010.

Stocks rose after the Federal Reserve left its key interest rate unchanged and said it plans to leave it “exceptionally low” for “an extended period.” The Fed also said that U.S. economy is picking up. The market maintained its advance even after the nation’s unemployment rate jumped to a more-than- forecast 10.2 percent in October, the highest level since 1983, according to a Labor Department report.[bn:WBTKR=BNI:US]

Burlington Northern [] soared 29 percent to $97.23. Berkshire agreed to pay $26 billion, or $100 a share in cash and stock, for the 77.4 percent of the railroad it doesn’t already own.

Buffett’s Buy

Berkshire has been building a stake in Burlington since 2006 as Buffett looked for what he called an “elephant”-sized acquisition allowing him to deploy his company’s cash hoard, which was more than $24 billion at the end of June. Trains stand to become more competitive against trucks with fuel prices high, he has said.

Black & Decker surged 29 percent to $61.05 for the steepest advance in the S&P 500. Stanley Works agreed to buy the maker of power drills and faucets for $3.5 billion, combining the two largest U.S. toolmakers in an all-stock transaction.

American Express Co., the biggest U.S. credit-card company by purchases, climbed 6.8 percent to $37.21 for the second- steepest advance in the Dow average. A Labor Department showed that the productivity of U.S. workers surged in the third quarter at the fastest pace in six years as companies squeezed more from remaining staff to boost profits.

‘Meaningful Correction’

“We could get as high as 1,200 on the S&P before we have a real meaningful correction,” said James Gaul, a money manager at Boston Advisors LLC, which oversees $1.5 billion in Boston. “There’s been a lot of good news.”

Starbucks Corp. rose 11 percent to $21.12. The world’s largest coffee-shop operator increased its 2010 profit forecast and said fourth-quarter earnings jumped as cost cuts expanded margins.

CVS Caremark Corp. fell the most in the S&P 500, plunging 16 percent to $29.79 for its biggest weekly drop since 2001. The largest U.S. provider of prescription drugs said its unit for managing pharmacy benefits lost $3.7 billion in contracts and disclosed that antitrust regulators are probing some business practices.

Newmont Mining Corp., the largest U.S. gold producer, climbed 13 percent to $49.04. Bullion futures jumped to a record, topping $1,100 an ounce, on mounting speculation that low U.S. borrowing costs will drive down the dollar, boosting the appeal of the precious metal as an alternative investment.

Reports next week will probably show the trade deficit in the U.S. widened in September, reflecting increasing demand for foreign oil and automobiles as the economy grew, according to the median forecast of economists surveyed by Bloomberg. Wal- Mart Stores Inc. and Walt Disney Co. are among the 18 companies in the S&P 500 scheduled to report results.

The benchmark index for U.S. stock options had its biggest weekly drop in almost a year. The VIX, as the Chicago Board Options Exchange Volatility Index is known, fell 21 percent to 24.19. The index, which measures the cost of using options as insurance against declines in the S&P 500, is down from a record 80.86 in November 2008 yet above its 20.28 average over its 19- year history.

To contact the reporters on this story: Mary Childs in New York at mchilds4@bloomberg.net; Lynn Thomasson in New York at lthomasson@bloomberg.net.

Last Updated: November 7, 2009 08:00 EST