The Standard & Poor’s 500 Index advanced to the highest level since May 2008 as Apple Inc. plans to pay a dividend and buy back $10 billion of its stock. Today’s gain extended this year’s rally in the S&P 500 to 12 percent. The measure is on pace for the best first quarter since 1998 amid better-than-estimated economic and corporate reports and expectations Europe would tame its debt crisis. It trades at 14.6 times reported earnings, the highest valuation level since July while still below the average since 1954 of 16.4 times earnings.

Dow 13,264.94     +32.32 +0.24%, Nasdaq      3,083.49       +28.23 +0.92%, S&P 500   1,413.35       +9.18         +0.65%

Apple gained 2.3 percent to $598.95 today. Investors will receive a quarterly dividend of $2.65 a share starting in the period beginning July 1, Cupertino, California-based Apple said in a statement. The buybacks will begin in the fiscal year starting Sept. 30 and will take place over three years, the company said.

Apple’s cash pile has swelled amid surging demand for its products, such as the iPhone and iPad. Investors had urged Apple to return some of the balance in the form a dividend. Chief Executive Officer Tim Cook fueled speculation an announcement might be coming when he said this year that Apple had “more than we need to run a company,” and that the board was considering its options.

Bank of America (ВАС) increased 1.7 percent, the biggest gain in the Dow, to $9.97. The shares have surged 25 percent in five days, the most since Aug. 30.

Citigroup jumped 4.2 percent to $38.22. The third-largest U.S. bank sold its 2.71 percent stake in Shanghai Pudong Development Bank to institutional investors, generating after- tax proceeds of about $349 million.

Morgan Stanley rallied 4.2 percent to $20.35. The owner of the world’s largest brokerage is planning its first corporate bond sale since October after the cost to protect its bonds from default dropped by almost 50 percent in the past four months.

U.S. Steel rose the most in the S&P 500, gaining 7.2 percent to $31.89. The country’s largest producer of the metal by volume should benefit from a recovery in steel prices, UBS AG said in a note.

UPS added 3.8 percent to $81.38. The company raised its offer for TNT Express NV by 5.6 percent to 5.16 billion euros ($6.8 billion) to secure the biggest deal in the U.S. company’s 105-year history.