Homebuilders boost Wall Street after Lennar's profit

NEW YORK (Reuters) - U.S. stocks rose on Tuesday after several fourth-quarter earnings reports and outlooks came in higher than expected, putting the S&P 500 index on course to snap three straight sessions of declines.

Homebuilder Lennar Corp surged 9.3 percent to $20.65 after posting a fourth-quarter profit sharply higher than expected.

"Lennar had a good number. Homebuilders was obviously an area that has been very weak, and for those guys that had a good number, that helped," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

The Dow Jones U.S. Home Construction index <.DJUSHB> jumped 3.9 percent and the PHLX Housing sector index <.HGX> gained 2.4 percent.

Stocks have rallied in recent weeks in part on optimism about stronger corporate profits, with the S&P up nearly 8 percent since the start of December.

However, the benchmark S&P 500 had lost ground over the past three sessions, leading some analysts to question whether stocks had become expensive or if the pullback meant stocks would climb again as earnings news rolled in.

"It's getting a little frothy. Any little stock that has a little wiggle to it, a bunch of guys are piling into it," Massocca said.

Sears Holding Corp rose 6.8 percent to $75.39 after the store chain raised its profit outlook above Wall Street estimates, citing strong sales.

The Dow Jones industrial average <.DJI> rose 53.32 points, or 0.46 percent, at 11,690.77. The Standard & Poor's 500 Index <.SPX> gained 6.28 points, or 0.49 percent, at 1,276.03. The Nasdaq Composite Index <.IXIC> added 11.36 points, or 0.42 percent, at 2,719.16.

Alcoa Inc posted a quarterly profit that topped Wall Street's expectations, though revenue slightly missed the analysts' average estimate. The aluminum maker's shares fell 1.2 percent to $16.28.

Alcoa projected a 12 percent rise in demand for aluminum this year, which some analysts questioned, but others noted profit-taking could be factor. Alcoa shares had risen 24 percent since the start of December.

Supermarket chain Supervalu Inc tumbled 11.5 percent to $7.60 after posting an adjusted third-quarter profit that missed expectations.

(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)

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