US STOCKS-Markets rise with focus on Fed but HP drops

                                
  
                                
 * Tuesday's Fed meeting on monetary policy in focus
                                
 * HP shares fall further on CEO's ouster
                                
 * McDonald's rises to lifetime high on sales gain
                                
 * Dow up 0.4 pct, S&P up 0.4 pct, Nasdaq up 0.6 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
 (Updates to afternoon trading, changes byline)
                                
 By Ryan Vlastelica
                                
 NEW YORK, Aug 9 (Reuters) - U.S. stocks ticked higher on
Monday on speculation the Federal Reserve would add liquidity
in a move to strengthen the economy just days after a
weaker-than-expected jobs report, the latest to suggest the
recovery was losing momentum.
                                
 Gains in the Dow were limited, though, as Hewlett-Packard
<HPQ.N> shares tumbled following the chief executive's
resignation.
                                
 The Fed, while widely expected to renew its vow to keep
interest rates near zero for an extended period, may indicate
it is prepared to print more money to boost the economy as
signs point to a slowing recovery. The bank is expected to
release its statement at 2:15 p.m. (1815 GMT) on Tuesday. For
details, see [ID:nN09301078].
                                
 The central bank's options include reinvesting maturing or
prepaying mortgage-back securities in its portfolio, which
would hold its balance sheet steady rather than let it shrink.
                                
 It could also say it will stop paying interest on banks'
excess reserves at the Fed to lower long-term rates and
encourage lending.
                                
 "Given the rally we had on Friday, after the weak jobs
report, it seems the markets are expecting something more from
the Fed than just a zero rate policy," said Paul Nolte,
managing director at Dearborn Partners in Chicago.
                                
 "There could be some disappointment if there isn't more."
                                
 Hewlett-Packard was the biggest drag on the Dow, falling
7.4 percent to $42.88 after CEO Mark Hurd resigned late on
Friday. His resignation followed an investigation into sexual
harassment charges brought by a female contractor sent the
company's shares down 10 percent in extended trade on Friday.
[ID:nN09221316].
                                
 The Dow Jones industrial average <.DJI> was up 38.38
points, or 0.36 percent, at 10,691.94. The Standard & Poor's
500 Index <.SPX> was up 4.92 points, or 0.44 percent, at
1,126.56. The Nasdaq Composite Index <.IXIC> was up 13.75
points, or 0.60 percent, at 2,302.22.
                                
 On the upside, McDonald's Corp <MCD.N> hit a lifetime high
at $73.33 after it reported July sales data that was stronger
than expected, though the stock later pared gains to trade at
$72.81, up 1.5 percent. [ID:nN09255018]
                                
 "McDonald's sales could prove somewhat troubling in the
future if consumers are still going for discounts rather than
spending at higher-end places," Nolte said.
                                
 The Nasdaq got a boost from Research in Motion Ltd
 <RIM.TO><RIMM.O>, U.S.-listed shares of which rose 3.7 percent
to $55.43. Earlier, a Saudi official said the BlackBerry maker
and Saudi mobile firms were testing three servers to send
communications and data through Saudi Arabia before Canada to
address Riyadh's concerns over security. [ID:nLDE6770AQ]
                                
 Goldman Sachs cut its year-end target for the S&P 500 index
to 1,200 from 1,250, reflecting a lower U.S. growth forecast.
                                
 "The weak GDP growth forecast and specter of deflation
means top-line sales increases will be hard to achieve," the
firm wrote to clients.
 (Reporting by Ryan Vlastelica; Editing by Kenneth Barry)