* Retailers, financials gain on Fed's lending plan
* Signs of deepening economic slump hit tech shares
* U.S. GDP shrinks more than previously thought
* For up-to-the-minute market news, please click on
STXNEWS/US
(Updates to midmorning)
By Ellis Mnyandu
NEW YORK, Nov 25 (Reuters) - The Dow and the S&P 500
indexes rose on Tuesday as investors snapped up shares of big
banks and retailers after the Federal Reserve announced the
creation of a facility to bolster consumer lending.
But with economic reports signaling more weakness in the
broader economy, the Nasdaq fell as declines in technology
bellwethers, including Research In Motion <RIM.TO><RIMM.O>,
offset optimism about steps to reverse the economic slump.
Shares of Wal-Mart Stores Inc <WMT.N> , the world's largest
retailer, and home improvement retailer Home Depot Inc <HD.N>,
each jumped more 3 percent, putting the stocks among the Dow's
top boosts.
Among financial companies, shares of Bank of America Corp
<BAC.N> climbed 3.3 percent to $15.08 as Citigroup <C.N>, which
on Sunday received a government bailout, gained more than 7
percent to $6.40.
"Obviously given how bad consumer spending is, that's one
of the reasons why the government is coming up with this new
program to support consumer lending," said Nigel Gault,
director of U.S. economic research at Global Insight in
Lexington, Massachusetts. "They've started trying to focus on
keeping consumers going if they can."
The Dow Jones industrial average <> rose 85.06 points,
or 1.01 percent, to 8,528.45. The Standard & Poor's 500 Index
<.SPX> gained 8.97 points, or 1.05 percent, to 860.78. The
Nasdaq Composite Index <> fell 8.86 points, or 0.60
percent, to 1,463.16.
Under the Fed's plan, the U.S. central bank will buy
billions of dollars worth of debt and mortgage-backed
securities to loosen up the flow of credit for mortgages, loans
for students, autos, and credit cards. For details, see
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But in the tech sector, shares of Apple <AAPL.O> was a top
drag on Nasdaq, falling nearly 4 percent to $89.85 as investors
worried that a slumping economy will put a lid on consumer and
business spending.
Computer maker Hewlett-Packard <HPQ.N> shares dropped 2.8
percent to $34.69 on the New York Stock Exchange even after the
company posted a solid quarterly profit report and upbeat
outlook on Monday.
Economic data showed that the U.S. economy shrank more
severely during the third quarter than first estimated as
consumers cut spending at the steepest rate in 28 years.
Many analysts consider the United States has already joined
Europe in recession, though it will take another quarter of
contraction to meet a widely used definition for it. The
third-quarter decline was a striking contrast with the second
quarter's rise in growth of 2.8 percent rate annualized.
The U.S. economy's decline is predicted to accelerate in
the fourth quarter and last into 2009.
(Editing by Kenneth Barry)
