Jul. 10--Stocks gained as an analyst upgrade of Goldman Sachs Group Inc. spurred a rally in financial shares and a rebound in natural gas prices lifted energy producers, tempering a drop in drugmakers.

Goldman Sachs surged 3.4 percent as Bank of America Corp. advised buying the shares and said the firm may post record trading revenue. Southwestern Energy Co. and Cabot Oil & Gas Corp. jumped at least 4.8 percent as natural gas and oil snapped their longest losing streaks of the year. Merck & Co. lost 3.7 percent to lead drug companies lower after Natixis Bleichroeder downgraded the shares.

The Standard & Poor's 500 Index added 0.4 percent to 882.68 at 4:08 p.m. in New York, rebounding from a two-month low. The Dow Jones Industrial Average advanced 4.76 points, or 0.1 percent, to 8,183.17. Treasuries fell, sending yields on 10-year notes up 0.11 percentage point to 3.41 percent.

"The burden of proof is now on earnings to come through and validate expectations," said Mark Freeman, a portfolio manager at Westwood Management Corp. in Dallas, which oversees $7.5 billion. "There's going to be a significant amount of pain associated to the transition the economy's going through. We're looking for companies that can provide an earnings bridge through this period."

Benchmark indexes rallied in early trading after Alcoa Inc., the first Dow company to release second-quarter earnings, posted better-than-estimated results and initial jobless claims fell to the lowest level since January. Stocks pared gains as billionaire investor Warren Buffett told ABC the economy is not yet in recovery and may need more federal stimulus.

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