(Corrects paragraph 10 reference to S&P's performance year to
date with S&P now down 3.2 percent, not 3.4 percent, from 6.4
percent loss at Tuesday's close, not Wednesday's)
* Progress on bank rescue plan buoys sentiment
* Fed: Prepared to buy long-term debt to help markets
* U.S. House of Representatives plans vote on stimulus
* For up-to-the-minute market news, click []
(Updates to close, adds byline)
By Ellis Mnyandu
NEW YORK, Jan 28 (Reuters) - U.S. stocks rose on
Wednesday, capping the S&P 500's longest winning streak since
November, as financial stocks soared on optimism the Obama
administration was making progress on a plan to relieve banks
of money-losing assets.
Stocks initially added gains following the Federal
Reserve's statement that it is prepared to buy long-term U.S.
government debt, but the boost faded upon the realization that
the Fed's purchases won't be made any time soon.
Financial stocks stood out, with JPMorgan <JPM.N> among
the Dow's top advancers with a gain of 10.4 percent. Bank of
America <BAC.N> climbed nearly 14 percent, while Citigroup
<C.N> shot up more than 18 percent.
The S&P financial index <.GSPF> rose 13 percent on reports
that plans were advancing to create a "bad bank" that would
mop up assets whose worth has plummeted, and in turn help
revive lending to consumers and businesses.
"What moved the market earlier in the day is the bad bank
concept gaining more acceptance," said Eric Kuby, chief
investment officer at NorthStar Investment Management Corp in
Chicago. "I don't think there are any big shockers from the
Fed's statement."
The Dow Jones industrial average <> finished up 200.72
points, or 2.46 percent, at 8,375.45. The Standard & Poor's
500 Index <.SPX> climbed 28.38 points, or 3.36 percent, to
874.09. The Nasdaq Composite Index <> ended up 53.44
points, or 3.55 percent, at 1,558.34.
The benchmark S&P 500 capped its fourth straight day of
gains, its longest run-up in two months.
Worries about the financial sector's health have been the
biggest hurdle for the market, fueling unease about stocks'
performance in January, which is traditionally seen as a guide
to the year's prospects.
On recent bets that the government will save the day, the
indexes have swiftly erased most of their year-to-date
losses.
Year to date, the benchmark S&P 500 is now down 3.2
percent, a marked improvement from a 6.4 percent loss seen at
Tuesday's close. After starting 2009 up more than 20 percent
from its Nov. 21 bear market low, the S&P is up 16.2 percent
from that significant low.
Adding to confidence in banks, an industry source said
Sheila Bair, the chairman of the Federal Deposit Insurance
Corp, is floating the idea that the FDIC could manage the "bad
bank." For details see [].
JPMorgan shares rose $2.60, or 10.4 perent, to $27.66 on
the New York Stock Exchange, while Bank of America finished at
$7.39. The Financial Select Sector SPDR <XLF.P>, a financial
exchange-traded fund, gained 12.7 percent.
The "bad bank" option had an effect on the market beyond
financials as a loosening up of lending would drive both
consumer and business spending, and motivate investors.
Technology shares jumped, led by such bellwethers as
iPhone maker Apple Inc <AAPL.O>, up 3.8 percent at $94.20 on
Nasdaq.
International Business Machines Corp <IBM.N>, a technology
services heavyweight, was the Dow's top advancer, finishing up
3.5 percent at $94.82 on the NYSE.
Internet media company Yahoo Inc <YHOO.O> climbed 8
percent to $12.24 after it posted quarterly results late on
Tuesday that beat analysts' expectations.
Following its two-day policy meeting, the U.S. Federal
Reserve also signaled in its statement some concern that
deflation risks were rising.
The central bank's policy-setting panel also said it was
holding its fed funds target range for overnight interest
rates at zero to 0.25 percent -- the level reached in December
-- and repeated that it thought rates could stay unusually low
for some time. []
(Additional reporting Deepa Seetharaman; Editing by Jan
Paschal)
