US STOCKS-Wall St flat as techs gain, Fannie, Freddie slump

                                
 * HP's strong results trigger tech rally
                                
 * Fannie, Freddie shares at lowest levels in over 17 years
                                
 * Oil prices fall about $1 a barrel, but energy stocks up
 (Updates to midday)
                                
 By Walter Brandimarte
                                
 NEW YORK, Aug 20 (Reuters) - U.S. stocks were little
changed on Wednesday as strong results from Hewlett-Packard
<HPQ.N> triggered a rally in the technology sector, but shares
of Fannie Mae and Freddie Mac slumped to more than 17-year lows
on fears the companies may need a government bailout.
                                
 HP's quarterly profit rose a forecast-beating 14 percent,
raising hopes that demand from abroad will support technology
spending, despite weakness in the United States. Shares of the
world's largest computer maker jumped 5.5 percent to $46.07 and
were the main boost for both the Dow and the S&P 500.
                                
 Financials also rebounded from Tuesday's sell-off as U.S.
crude oil prices fell more than $1 per barrel, supporting hopes
inflation will ease and interest rates will remain low, helping
the bank sector.
                                
 But shares of housing finance giants Fannie Mae <FNM.N> and
Freddie Mac <FRE.N> plunged on growing concerns that a possible
government bailout might dilute shareholder value.
                                
 "Until that issue gets resolved you'll continue to have
that uncertainty, and it will be hard for the market to make
any progress in that atmosphere," said Alan Lancz, president of
Alan B. Lancz & Associates Inc, an investment advisory firm in
Toledo, Ohio.
                                
 The Dow Jones industrial average <.DJI> edged higher 9.12
points, or 0.08 percent, at 11,357.67, while the Standard &
Poor's 500 Index <.SPX> was up by 0.18 point, or 0.01 percent,
at 1,266.87. The Nasdaq Composite Index <.IXIC> dipped 1.23
points, or 0.05 percent, at 2,383.13.
                                
 Shares of Fannie Mae, the biggest U.S. provider of housing
finance, fell 16.8 percent to $5.00 after falling as low as
$4.74. Shares of Freddie Mac fell 19.7 percent to $3.35, after
trading as low as $3.15.
                                
 Despite the fall in oil prices, energy shares posted strong
gains, supporting the S&P 500. Shares of oil producer and
refiner Hess Corp <HES.N> climbed 2.6 percent to $101.02, while
ConocoPhillips <COP.N> rose 1 percent to $80.05.
                                
 "To me, the market has now recognized that oil services
stocks and equipment stocks sold off more than they should
have," said Michael Koskuba, portfolio manager and analyst with
Victory Capital Management.
 (Additional reporting by Ellis Mnyandu; Editing by Leslie
Adler)