* UMich consumer sentiment data, leading indicators top
* J.C. Penney drops after earnings
* Kansas City Southern to join S&P 500
* Dow up 0.4 pct, S&P 500 up 0.6 pct, Nasdaq up 0.6 pct
By Chuck Mikolajczak
NEW YORK, May 17 (Reuters) - U.S. stocks advanced on Friday,
with the S&P 500 erasing declines in the previous session,
putting the index on track for its fourth straight weekly
advance as data helped support recent momentum.
The benchmark S&P 500 index fell 0.5 percent on Thursday,
its biggest drop since May 1, after a Federal Reserve official
said the U.S. central bank could begin reducing its monetary
stimulus program this summer.
The central bank's program of $85 billion a month in bonds
has been a major driver of the rally in equities that has
propelled both the Dow and the S&P 500 to record highs
and sent both indexes up about 16 percent for the year.
"We'll see how the Fed communicates when they start to take
their foot off the accelerator. The market could react to that
when it finally comes, and at some point, they are going to have
to do it - and they are going to have to announce it," said
Cameron Hinds, regional chief investment officer of Wells Fargo
Private Bank in Lincoln, Nebraska.
The Thomson Reuters/University of Michigan's preliminary
reading on the overall index on consumer sentiment rose to 83.7,
its highest level in nearly six years as Americans felt better
about their financial and economic prospects, up from 76.4 in
April and above economists' expectations for a preliminary May
reading of 78.
"We have the confidence number come out, but I would almost
say the market itself is a better indication of confidence at
this point because it's certainly been positive," Hinds said.
In addition, the Conference Board, a private industry group,
said on Friday that its Leading Economic Index increased 0.6
percent in April to 95.0 - the highest level since June 2008 and
above the forecast for a gain of 0.2 percent.
The stimulus measures taken by central banks around the
globe have enabled investors to shrug off more recent economic
data indicating only sluggish improvement in the U.S. economy.
The Dow Jones industrial average gained 64.25 points,
or 0.42 percent, to 15,297.47. The Standard & Poor's 500 Index
rose 9.16 points, or 0.55 percent, to 1,659.63. The
Nasdaq Composite Index advanced 19.75 points, or 0.57
percent, to 3,484.99.
Earlier in the session, the Dow hit another all-time
intraday high at 15,305.44.
J.C. Penney Co Inc shares lost 3.1 percent to $18.21
after the retailer reported another steep quarterly loss on weak
sales and heavy clearance deals, and Chief Executive Myron
Ullman cautioned he needs time to fix the company's problems.
General Motors Co shot up 3 percent to $33.36 after
CLSA raised its rating on the automaker to "buy" from
S&P Dow Jones Indices said after the close on Thursday that
S&P MidCap 400 component Kansas City Southern
will replace Dean Foods Co in the S&P 500. Kansas City
Southern shares gained 1.5 percent to $117.93 while Dean Foods
rose 0.7 percent to $20.74.
Aruba Networks Inc plunged 27.2 percent to $12.82
after the network equipment maker released fourth-quarter
results well below Wall Street's expectations, hurt by rising
competition from Cisco Systems Inc.