* Fed says U.S. economy is stabilizing
* Toll Brothers, homebuilders jump; Applied Materials up
* Macy's rises on better-than-expected results
* Dow up 1.8 pct; S&P 500 up 1.7 pct; Nasdaq up 2.2 pct (Updates to mid-afternoon, changes byline)
By Rodrigo Campos
NEW YORK, Aug 12 (Reuters) - U.S. stocks added to gains on Wednesday as the Federal Reserve said it saw signs of a more stable economy, while an upbeat report from chip equipment maker Applied Materials boosted technology shares.
The Federal Reserve said the economy was leveling out, and it left interest rates unchanged at the close of its two-day policy meeting.
"There's an indication that the Fed is well aware that the economy is starting to turn and of course that's good," said Carl Birkelbach, chairman and chief executive at Birkelbach Investment Securities in Chicago.
Financials was the best-performing sector on the S&P 500, up 2.4 percent, with insurer Allstate Corp up 7.1 percent to $28.63. Bank of America-Merrill Lynch upgraded Allstate to "buy" from "neutral," saying the fundamentals of its core business were stable.
The Dow Jones industrial average gained 169.81 points, or 1.84 percent, to 9,411.26. The Standard & Poor's 500 Index rose 16.71 points, or 1.68 percent, to 1,011.06. The Nasdaq Composite Index added 42.68 points, or 2.17 percent, to 2,012.41.
With 90 percent of the S&P 500's companies having reported quarterly score cards, 72 percent have beaten expectations, according to the most recent Thomson Reuters data.
The S&P is up about 50 percent from its more than 12-year closing low set on March 9.
Shares of Applied Materials rose 4.1 percent to $13.76 after the company said it would at least break even this year thanks to new orders and deep cost cuts The PHLX semiconductor index gained 2.4 percent.
Shares of luxury home builder Toll Brothers soared 14.2 percent to $23.39 after it said its net signed contracts rose in the third quarter, the first increase in four years. The Dow Jones home construction index jumped 5.1 percent.
Shares of Macy's Inc rose 7.1 percent to $16.57 after the department store operator posted better-than-expected earnings and raising its outlook. (Additional reporting by Ryan Vlastelica; Editing by Leslie Adler)