May 27 (Bloomberg) -- U.S. stocks gained, rebounding from the biggest weekly tumble since February, after a drop in oil prices sparked a rally in companies dependent on consumer spending and analysts recommended buying technology shares.

Novellus Systems Inc., a maker of equipment that turns silicon wafers into computer chips, jumped the most in two weeks after RBC Capital Markets said it expects the company to top analysts' earnings estimates. Darden Restaurants Inc., owner of the Olive Garden chain, posted its biggest rally since April 1 on Merrill Lynch & Co.'s advice to buy the shares. Lennar Corp. led gains in all five homebuilders in the Standard & Poor's 500 Index after the government said new-house sales unexpectedly increased.

The S&P 500 added 9.42 points, or 0.7 percent, to 1,385.35. The Dow Jones Industrial Average rose 68.72, or 0.6 percent, to 12,548.35. The Nasdaq Composite Index increased 36.57, or 1.5 percent, to 2,481.24. Two stocks gained for each that fell on the New York Stock Exchange.

``This idea that the consumer is going to completely capitulate is probably overblown,'' James Paulsen, chief investment strategist at Wells Capital Management, which oversees $222 billion, told Bloomberg Television. ``If it is, then those consumer discretionary stocks could probably provide some pretty good values.''

Eight of 10 industries in the S&P 500 advanced, with only producers of energy and raw materials retreating. The 2.5 percent drop in oil was the steepest decrease this month and overshadowed a bigger-than-forecast decline in the Conference Board's consumer confidence index to 57.2, the lowest level since 1992.

Tech Rally

Novellus added 3.2 percent to $23.30. RBC said it has ``high confidence'' in its 2008 calendar-year profit estimates of 51 cents a share and expects the company to gain market share.

Lam Research Corp., the third-largest U.S. maker of chip- manufacturing equipment, was raised to ``buy'' from ``neutral'' at Merrill Lynch, which said it expects the industry's stocks to rally two to six months before orders reaccelerate in the fourth quarter. Lam added 6.5 percent to $40.54.

Technology shares in the S&P 500 gained 1.9 percent as a group, the most among 10 industries in the S&P 500. International Business Machines Corp., the world's second-largest software maker, gained 2.5 percent to $127.32. Google Inc., owner of the most popular Internet search engine, climbed 3 percent to $560.90.

Consumer Shares Advance

Darden Restaurants rose 4.5 percent to $33.18. The restaurant company can withstand a slowdown in consumer spending better than smaller chains, Merrill Lynch analyst Rachael Rothman wrote in a report. Merrill upgraded Darden to ``buy'' from ``neutral'' and set a price forecast of $39.

Darden led the S&P 500 Consumer Discretionary Index to a 1.1 percent advance.

Standard Pacific Corp. surged 48 percent to $3.29. The California-based homebuilder, which lost 90 percent of its market value in the year through May 23, said in a statement that MatlinPatterson Global Advisers LLC would make a $530 million investment in the company.

Lennar led homebuilders higher after new-home sales in the U.S. unexpectedly rose in April after readings for the prior month were revised down. Sales increased to an annual pace of 526,000 from a 509,000 rate the prior month that was the lowest in 17 years, the Commerce Department said. The gains overshadowed a 14.4 percent drop in the S&P/Case-Shiller home-price index, the most since the figures were first published in 2001.

Lennar, the third-largest U.S. homebuilder, climbed 3.6 percent to $17.48.

Banks Rebound

Banks and brokerages rebounded from last week's 6.1 percent tumble, with 77 of 92 companies in the S&P 500 Financials Index climbing. Citigroup Inc., the biggest U.S. bank, climbed 2.6 percent, while JPMorgan Chase & Co., the third-largest by assets, added 1.6 percent and Bank of America Corp., the No. 2., advanced 0.7 percent.

Banks are becoming more confident about lending, money market rates indicate. The difference between three-month Treasury bill yields and the three-month London interbank offered rate, the so-called TED spread, was 73 basis points. The gap was close to the narrowest since August, when corporate borrowing costs surged as losses tied to defaulted subprime loans spread.

Hershey Co. gained the most since July 2002 after Sanford C. Bernstein & Co. said a joint venture with Nestle SA might be the ``most attractive option'' for the chocolate maker following Mars Inc.'s agreement last month to buy Wm. Wrigley Jr. Co. for $23 billion. Hershey rose 9.4 percent to $39.93.

Commodities Retreat

Energy companies fell the most among 10 S&P 500 industries, losing 0.7 percent. Crude oil for July delivery fell $3.34 to $128.85 a barrel on signs that U.S. fuel consumption is dropping because of a slowing economy and record energy prices.

Exxon Mobil Corp., the largest U.S. energy company, lost 90 cents to $89.80. Chevron Corp., the second-biggest, retreated $1.15 to $99.58.

The drop in crude spurred a 2.4 percent gain in the S&P 500 Transportation Index, its biggest advance since April 16, as all 10 of its companies advanced.

United Parcel Service Inc., the world's biggest package- shipment company, jumped 2.1 percent to $68.40. Rival FedEx Corp. rallied 3.3 percent to $89.67.

The AMEX Airline Index rebounded from a record low, advancing 3.9 percent. Southwest Airlines Co., the largest low- fare carrier, jumped 2.9 percent to $12.62.

Raw-materials producers slid the most after oil companies. Gold dropped as crude's decline reduced demand for the precious metal as a hedge against inflation. Newmont Mining Corp., the world's second-biggest gold producer, fell the most in three weeks, losing $1.07, or 2.2 percent, to $47.67.

Profit Slump

The S&P 500 fell 3.5 percent last week on concern a worsening housing recession and rising energy costs will prolong the slump in corporate profits. Earnings have fallen 18 percent on average for the 461 companies in the S&P 500 that reported first-quarter results since April 7, according to data compiled by Bloomberg. That's the third straight quarterly slump. Analysts expect growth to rebound and increase 6.8 percent for the full year.

``Although the fundamental news isn't terrific, either in terms of earnings growth or economic growth, we think that all of that or more is already in the market,'' John Kattar, chief investment officer at Eastern Investment Advisors in Boston, which manages $2 billion, said in a Bloomberg Television interview. ``We are looking for new highs by the end of the year in the S&P.''

Fannie Mae and Freddie Mac, which own or guarantee about 45 percent of the $12 trillion in U.S. home loans, fell the most in the S&P 500. Their agreement to restrict banks from using in- house appraisal companies may violate federal law, U.S. Comptroller of the Currency John C. Dugan said in a letter to the companies' supervisor. Fannie Mae lost $1.06, or 3.8 percent, to $26.53. Freddie Mac dropped $1, or 3.9 percent, to $24.73.

The Russell 2000 Index, a benchmark for companies with a median market value 95 percent smaller than the S&P 500's, climbed 1.4 percent to 734.38. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, rose 0.8 percent to 14,059.08. Based on its advance, the value of stocks increased by $130.5 billion.