US STOCKS rose yesterday after another round of solid economic reports, but pulled off session highs after a Fed official’s warning about banks’ loan losses.<br /><br />The three major indexes had previously risen about 1 per cent earlier in the session as stronger-than-expected data on manufacturing and pending home sales spurred a broad-based advance and soothed worries over the recovery’s strength. <br /><br />Industrial and materials stocks rose after the solid numbers on manufacturing activity, with the S&P Industrials index and the S&P Materials index both rising 1 per cent.<br /><br />However, a Federal Reserve official’s critical comments about banks’ potential losses on commercial real estate loans caused investors to sell some financial shares. Stocks still managed to close the session with solid gains, but could not maintain earlier momentum.<br /><br /><strong>Ford Motor</strong> shares jumped 8.3 per cent to $7.58 after the automaker posted a quarterly profit, topping Wall Street’s estimates for a loss as it cut costs and gained market share, prompting it to boost its 2011 outlook to “solidly profitable” from break-even. <br /><br />In testimony yesterday Jon Greenlee, the associate director of the Fed’s Division of Banking Supervision and Regulation, said US banks are at risk for sizable new loan losses, particularly on commercial property, and some banks may not have enough capital to fully cushion against setbacks. <br /><br />Today, the Federal Reserve is set to begin its two-day policy meeting.<br /><br />The KBW Banks index rose 0.9 per cent, well off its earlier high that had driven it up more than 3 percent. <br /><br />The Dow Jones industrial average gained 76.71 points, or 0.79 per cent, to end at 9,789.44. The Standard & Poor’s 500 Index climbed 6.69 points, or 0.65 per cent, to 1,042.88. <br /><br />The Nasdaq Composite Index added 4.09 points, or 0.20 per cent, to 2,049.20.