* U.S. service sector shrank less than expected in January
* Big-cap tech shares gain, including Microsoft
* Kraft falls after it cuts 2009 earnings forecast
* Dow up 0.1 pct, S&P up 0.8 pct, Nasdaq up 1.6 pct
* For up-to-the-minute market news, click []
(Updates to late morning)
NEW YORK, Feb 4 (Reuters) - U.S. stocks gained on Wednesday
as a reassuring report on the services sector overshadowed a
fresh batch of disappointing corporate profits and outlooks and
helped drive up technology shares.
Data from the Institute for Supply Management showed the
service sector, which represents about 80 percent of U.S.
economic activity, shrank again in January, but by less than
expected, boosting hopes about business and consumer spending.
For more see [].
"Some of these indicators are starting to demonstrate that
the economy is bottoming. That's sparking a rally and people
are drawing the conclusion that the worst is behind us," said
Stephen Massocca, managing director of Wedbush Morgan in San
Francisco.
"Sentiment is very, very low and it doesn't take much to
spark these rallies," he added.
Investors snapped up shares of big-cap technology
companies, including Microsoft <MSFT.O>, which was up nearly 2
percent at $18.85 and Apple <AAPL.O>, up more than 3 percent at
$95.85.
The Dow Jones industrial average <> added 10.91 points,
or 0.14 percent, to 8,089.27. The Standard & Poor's 500 Index
<.SPX> gained 6.98 points, or 0.83 percent, to 845.49. The
Nasdaq Composite Index <> was up 24.10 points, or 1.59
percent, at 1,540.40.
The broad S&P 500 is up about 12 percent from the 11-year
lows reached in late November, after entering 2009 up about 20
percent from those lows.
Financial shares rose on hopes of a plan from the Obama
administration to shore up the beleaguered banking sector.
Treasury Secretary Timothy Geithner said he will reveal details
on plans for energizing the economy and boosting credit flows
next week.
The S&P financial index <.GSPF> was up nearly 3 percent,
with JPMorgan Chase <JPM.N> rising 4.4 percent to $25.11.
Another round of disappointing earnings, however, put a cap
on gains on the Dow. Kraft Foods Inc <KFT.N> was the Dow's
biggest drag after it reported lower profits as sales fell and
it cut its 2009 earnings forecast. []. Shares of
Kraft, which makes Oreo cookies, Kraft cheese and Maxwell House
coffee, shed more than 8 percent to $26.34.
Dow component Walt Disney Co <DIS.N> lost 5.4 percent to
$19.51 after the media company's profit missed expectations as
it felt the effects of the global slowdown. [].
(Additional reporting by Deepa Seetharaman; Editing by Leslie
Adler)
