* Dollar rally sends global commodities lower
* Oil's drop of over $3 buoys retailers
* Lehman rises on news of Soros stake
* Dow and S&P up 0.2 pct, Nasdaq off 0.1 pct
(Updates to early afternoon)
By Kristina Cooke
NEW YORK, Aug 15 (Reuters) - U.S. stocks mostly edged
higher on Friday, as a drop in the price of oil added to hopes
of a revival in consumer spending, boosting the outlook for
economic and profit growth.
The Dow industrials and the S&P 500 held modest gains in
early afternoon trading, while the Nasdaq dipped.
A rally in the U.S. dollar on fears about slowdowns in
non-U.S. economies pushed the price of oil down more than $3.
Oil's decline spurred hopes that consumers will go shopping
with the money they save at the pump and that view helped lift
retailers' shares.
The tone for retailers was set late on Thursday after
Kohl's Corp <KSS.N> raised its full-year forecast, saying
tight expense controls would help it weather a tough U.S.
economy.
Mid-tier department store operator J.C. Penney Co Inc
<JCP.N> added to that optimism, when it reported earnings that
beat Wall Street's expectations on Friday morning.
Big manufacturers and airlines, whose earnings take a hit
when fuel costs rise, also gained. A report showing a
surprising rise in manufacturing activity in New York state in
August added to the positive tone.
"Stocks have been directly linked to oil prices for some
time and the further decline in oil prices is definite support
for the consumer and definite support for the economy," said
Alan Gayle, senior investment strategist at Trusco Capital
Management in Atlanta.
"So equities are liking the decline in oil and they are
liking the stronger dollar. The weakness that was apparent in
the U.S. last fall is spreading overseas and causing foreign
currencies to move downward, which makes U.S. stocks look
better."
The Dow Jones industrial average <> rose 17.83 points,
or 0.15 percent, to 11,633.76, while the Standard & Poor's 500
Index <.SPX> added 2.96 points, or 0.23 percent, to 1,295.89.
But the Nasdaq Composite Index <> was down 1.77 points,
or 0.07 percent, at 2,451.90.
Limiting the Nasdaq's decline was Cisco Systems <CSCO.O>,
a maker of networking equipment, which rose 1.5 percent to
$25.05. In contrast, shares of iPhone and iPod maker Apple Inc
<AAPL.O> slid 1.6 percent to $176.51 and ranked as the
heaviest weight on the Nasdaq 100 <> index.
But most of Friday's momentum belonged to retailers, whose
stocks rose as oil prices slid further below $112 a barrel. An
index of S&P retail shares <.RLX> rose 1.6 percent. U.S. crude
futures <CLc1> were down $3.31 at $111.70 a barrel.
The stock of JCPenney gained 7.3 percent to $39.53 and
Kohl's shares rose 7.3 percent to $51.80. Both operate
department stores, with JCPenney in moderate-priced category
and Kohl's in lower-priced bracket.
Procter & Gamble <PG.N> shares rose 2.2 percent to $71.22,
while Wal-Mart Stores <WMT.N>, the world's biggest retailer,
gained 1.5 percent to $58.99. General Electric shares added
1.2 percent to $29.86.
An index of airline stocks <.XAL> rose 4.5 percent.
Shares of MBIA Inc <MBI.N> and Ambac Financial Group
<ABK.N> jumped on news that Standard & Poor's is no longer
reviewing the ratings on the insurance arms of both companies
for downgrade. MBIA shares shot up 7.8 percent to $11.12,
while Ambac surged 26.1 percent to $5.75.
Lehman Brothers Holdings Inc <LEH.N> shares rose 0.4
percent to $16.27, a day after investor George Soros disclosed
he raised his stake in the Wall Street investment bank to 9.5
million shares. For details, see []
U.S. consumer sentiment improved slightly in early August,
thanks to a drop in gasoline prices as inflation expectations
improved, data showed on Friday.
(Additional reporting by Jennifer Ablan; Editing by Jan
Paschal)
