Homebuilders drive US stock rally The S&P 500 was on track to close at a record high following comments from Federal Reserve chairman Ben Bernanke after market close on Wednesday, led by a sharp rally from homebuilders. Standard & Poor's Supercomposite Homebuilding Index added 6.3 per cent, aided by renewed confidence that the Fed was in no hurry to end its quantitative easing programme or raise interest rates, which have remained at low levels and helped spur the US real estate recovery. PulteGroup was among the highest risers, up 7.3 per cent to $20.40. The company is now more than 14 per cent higher than its June lows, hit after interest rates rose sharply following comments from the Fed and Mr Bernanke that were interpreted by the market as hawkish. Other homebuilders have endured a similar rocky ride but joined Thursday's rally. Lennar rose 7.9 per cent to $37.30, DR Horton added 7.7 per cent to $22.67, the Ryland Group gained 5.8 per cent to $40.67, and Taylor Morrison advanced 4.9 per cent to $25.75. The S&P 500 was up 1.1 per cent to 1,670.26. All ten major sectors were higher, led by a 1.6 per cent rise in materials stocks. The benchmark index is now 7 per cent higher than June lows, and up more than 17 per cent for the year. Advanced Micro Devices was among the day's strongest stocks, 9.3 per cent higher to $4.35. The company was upgraded by analysts at Bank of America Merrill Lynch and Canaccord Genuity. The chipmaker is believed to be in line to benefit from strong sales of new video game systems from Microsoft and Sony, for which AMD is a supplier. The Nasdaq Composite Index led the major indices, up 1.2 per cent to 3,563.83. The Dow Jones Industrial Average rose 0.9 per cent to 15,435.77. Microsoft rose 1.9 per cent after announcing plans to reorganise its product units in an effort to bring products to market faster. The software company has risen more than 32 per cent on the year to date. Facebook shares were hit by a "neutral" rating from Susquehanna, which initiated coverage of the company. Shares of the social network dropped 0.5 per cent to $25.68. Yum shares were down only 0.5 per cent to $72.03 despite reporting on Wednesday a 15 per cent drop in second-quarter earnings. However, the results beat analyst estimates. Analysts believe concerns over food safety in China have been adequately addressed. Earnings have taken on a new importance in a market that is increasingly coming to terms with the fact that the end is in sight for quantitative easing. With trend change comes uncertainty, investor anxiety, market volatility, but all things considered, we didn't learn anything yesterday. The Fed reports what we already know: the US economy is improving, the Fed is considering when to end quantitative easing, and rate hikes are not likely to occur until employment hits 6.5 per cent," said Terry Sandven, chief equity strategist for US Bank Wealth Management. The Fed funds rates are not going up, inflation remains restrained and I think the eventual tapering of quantitative easing appears already factored into equity prices. So while the Fed is getting attention today and next week, I think the focus is shifting toward earnings and that will capture headlines in the next couple of weeks. Brokerages that deal with retail investors were among the weakest performers on the day after an editorial in the Wall Street Journal from Charles Schwab and Walt Bettinger acknowledged that fewer Americans are interested in owning stock. Charles Schwab fell 2.5 per cent to $21.38, TD Ameritrade dropped 3.4 per cent to $25.26, and Etrade Financial lost 1.6 per cent to $13.32.