* Bleak earnings fuel caution but tech edges up
* Obama says more banks could fail
* Dow off 0.2 pct, S&P up 0.4 pct, Nasdaq up 1.2 pct
* For up-to-the-minute market news, click []
(Updates to midday, changes byline)
By Rodrigo Campos
NEW YORK, Feb 2 (Reuters) - The Dow fell on Monday as
uncertainty over the financial bailout package being discussed
in Washington added to concerns about lackluster earnings.
The latest reading in a manufacturing index showed a
smaller than expected decline, however, lifting beaten-down
shares of technology companies that could benefit from any
improvement in capital spending. This pushed the Nasdaq up 1
percent while the S&P 500 index also edged higher.
The economic stimulus plan approved in the U.S. House of
Representatives last week without a single Republican 'yes'
vote faces hurdles as a revised version is discussed in the
Senate. Investors are concerned over the content and extent of
an approved plan.
"We still have a lot of things in Washington that are still
unanswered; no one knows how the stimulus package is going to
play out," said Warren West, principal at Greentree Brokerage
Services in Philadelphia.
"It looks as if partisanship reigns in Washington, and that
is not exactly the healthiest environment."
Adding to an already bleak earnings session, shares of
Rockwell Automation were down 11 percent after the maker of
systems to help factories run smoothly cut its 2009 profit
forecast sharply. For details see [].
But stocks in technology companies rebounded and the Nasdaq
was positive, led by a 5 percent jump in Microsoft shares,
following data that showed U.S. manufacturing shrank in January
but by less than expected.
The Dow Jones industrial average <> shed 16.88 points,
or 0.21 percent, to 7,983.98. The Standard & Poor's 500 Index
<.SPX> edged up 3.33 points, or 0.40 percent, to 829.21. The
Nasdaq Composite Index <> added 18.43 points, or 1.25
percent, to 1,494.85.
Rockwell Automated shares <ROK.N>, down about 11 percent to
$23.20, and Boeing <BA.N>, off 4.1 percent to $40.59, weighed
on the S&P industrials index <>, the worst performing
sector in Monday's session. Boeing was also one of the top
drags on the Dow.
Top toy company Mattel Inc <MAT.N> reported disappointing
profits, and shares of the maker of the Barbie doll slid 15
percent to $12.07.
U.S. President Barack Obama said in an interview with NBC
it was likely that banks have not fully acknowledged all their
losses and "some banks won't make it" through the crisis, and
so financials also weighed down stocks.
Bank of America <BAC.N> shares slid 7 percent to $6.12.
The Nasdaq was led higher by big-cap tech companies
including Microsoft <MSFT.O>, up 5.5 percent to $18.04, and
Apple <AAPL.O>, which rose 1.3 percent to $91.29.
"We're getting a relief rally out of tech because tech is a
big beneficiary of capital spending, particularly from the
industrials," said Terry Morris, senior equity manager for
National Penn Investors Trust Company in Reading,
Pennsylvania.
"Because manufacturing did not shrink as bad as forecasted,
companies themselves may loosen up their wallets a little
more."
The tech sector has been hard hit by worries it will be
hurt by slower spending as consumers and businesses grapple
with the recession.
(Additional reporting by Deepa Seetharaman; Editing by James
Dalgleish)
