* Late rally on Reuters report lifts stocks
* Surprise rise in retail sales, jobless claims inch down
* S&P up 0.1 pct, Nasdaq up 0.7 pct, Dow dips 0.1 pct
* For up-to-the-minute market news, click []
(Adds context to Dow)
By Chuck Mikolajczak
NEW YORK, Feb 12 (Reuters) - U.S. stocks staged a late
rally to close mostly higher on Thursday after Reuters reported
the Obama administration was working on a program to subsidize
mortgage payments for troubled homeowners.
The S&P 500 and Nasdaq ended higher while the Dow
industrials retraced losses to close slightly lower as
investors starved for good news bet the government had taken a
big step toward stabilizing the housing market.
Banks and homebuilders, which had helped drag the market
lower throughout the session, more than halved their losses
after Reuters reported the government was working on a program
that would help homeowners most in need before they fall into
arrears. For details, see []
"It's being viewed as a positive both for the mortgage
industry and home building industry as well," said Richard
Sparks, senior equities analyst at Schaeffer's Investment
Research in Cincinnati, Ohio.
The Dow Jones industrial average <> shed 6.77 points,
or 0.09 percent, to end at 7,932.76. The Standard & Poor's 500
Index <.SPX> added 1.45 points, or 0.17 percent, to 835.19. The
Nasdaq Composite Index <> rose 11.21 points, or 0.73
percent, to 1,541.71.
The Dow is down 9.6 percent so far in the year-to-date, but
is still up 5 percent from its Nov. 20 closing low.
Before the rally in the last hour of trading, in which the
Dow retraced 2.8 percent, investor fears that a $789 billion
economic stimulus package to be voted on as early as Friday
would not be enough dig the economy out of recession weighed on
Wall Street.
Solid quarterly results from Coca-Cola Co <KO.N>
underpinned the rally, as it ended up 7.6 percent at $44.39
making it the top driver of the Dow.
Gains in big-cap technology stocks, including iPhone maker
Apple <AAPL.O> and BlackBerry maker Research in Motion <RIM.TO>
<RIMM.O>, which rebounded after a 14.5 percent drop Wednesday,
helped lift Nasdaq.
Apple <AAPL.O> ranked as the top gainer on Nasdaq, ending
up 2.5 percent to $99.27, while Research in Motion added 3.4
percent to $50.24.
The KBW Bank index <.BKX> fell 2.8 percent and the S&P
Financial Index shed 1.3 after earlier falling by over 6
percent and 7 percent, respectively.
Investors have grown increasingly wary of the government
plan to cleanse the financial sector of toxic assets that have
constrained lending, deepening the recession.
Among banking shares, Citigroup <C.N> fell 2.2 percent to
$3.61; Wells Fargo <WFC.N>, fell 4 percent at $16.80, and Bank
of America <BAC.N> dipped 3.3 percent to $5.87, each well above
their session lows.
Government data showing that the number of people still
receiving unemployment benefits after drawing an initial week
of aid hit a record in the last week of January, which
underscored the toll of the 14-month-old recession on the labor
market.
Volume was moderate on the New York Stock Exchange, where
about 1.48 billion shares changed hands, roughly in line with
last year's estimated daily average volume of 1.49 billion
shares. On the Nasdaq, about 2.47 billion shares traded,
slightly above last year's daily average of 2.28 billion.
Decliners outnumbered advancers on the NYSE by a ratio of
about 11 to 10, while on the Nasdaq, the ratio was about even.
(Editing by Gary Crosse)
(Additional reporting by Leah Schnurr)
