* Pending home sales rose 6.3 pct in December
* Merck gains after beating expectations
* SanDisk sheds 23 pct, limits Nasdaq gains
* Dow up 0.6 pct, S&P up 0.5 pct, Nasdaq 0.2 pct
* For up-to-the-minute market news, click []
(Repeats to fix typo in 9th paragraph)
(Updates to midday, changes byline)
By Deepa Seetharaman
NEW YORK, Feb 3 (Reuters) - U.S. stocks edged up on Tuesday
after a surprising rise in December pending home sales and
strong earnings from drugmaker Merck tempered worries about the
economy and an otherwise gloomy quarterly results season.
But Nasdaq's gains were limited as a poor revenue outlook
from flash memory card maker SanDisk Corp <SNDK.O>, whose chips
are used in products including cell phones and digital cameras,
signaled slower consumer spending in the technology sector.
Still, investors saw a glimmer of hope in the housing
market after pending sales of existing homes rose 6.3 percent,
lifting an index of home builder stocks <.DJUSHB> nearly 6
percent.
Wall Street was also helped by news that the Federal
Reserve extended, by six months, programs designed to funnel
billions of U.S. dollars to markets worldwide to keep money
flowing in the battered banking system.
For more on the Fed and on pending home sales see
[].
"We have a lot of investors desperately looking for signs
that fundamental improvement is on the horizon," said Craig
Peckham, equity trading strategist for Jefferies & Co in New
York. "The Fed is extending liquidity programs and telling you
in same breath that conditions remain quite strained."
The Dow Jones industrial average <> added 43.32 points,
or 0.55 percent, at 7,980.15. The Standard & Poor's 500 Index
<.SPX> gained 3.91 points, or 0.47 percent, at 829.35. The
Nasdaq Composite Index <> rose 3.05 points, or 0.20
percent, at 1,497.48.
Cost cuts and favorable taxes helped Merck & Co <MRK.N> and
Schering-Plough Corp <SGP.N> post quarterly results above Wall
Street estimates. Merck was among the Dow's biggest boosts, up
5.5 percent to $29.99, while Schering-Plough rose 5.3 percent
to $18.40. []
Pending sales of existing U.S. home rebounded in December,
according to data based on contracts signed, a promising
indication after months of negative data. []
No. 1 U.S. home builder D.R. Horton <DHI.N> was the top
percentage gainer on the New York Stock Exchange, surging more
than 18 percent to $7.23. It reported a smaller-than-expected
quarterly loss on Tuesday.
Luxury home builder Toll Brothers <TOL.N> gained 4.2
percent to $17.70, while No. 3 U.S. home builder, Pulte Homes
<PHM.N>, rose about 3.5 percent to $10.60, ahead of its
expected results on Wednesday.
But the Nasdaq was hurt after SanDisk warned that revenue
for the current quarter would fall short of expectations and
said it may undertake an equity offering that could dilute
shares by as much as 20 percent. The stock plunged nearly 23
percent to $8.71. []
Losses still plagued banks amid a lack of definitive
measures to steady the sector. The KBW index of banking shares
<.BKX> fell nearly 6 percent as investors worried that the
government may have to nationalize the sector, or parts of it.
[]
Bank of America <BAC.N> tumbled 9.5 percent to $5.44, while
Citigroup <C.N> shed nearly 5 percent to $3.47, after hitting a
session low.
Stability in the housing market and financial sector is
critical to the recovery of the U.S. economy, which slipped
into recession in December 2007. Investors are bracing for the
U.S. payrolls report for January that is due for release on
Friday morning, which could pin unemployment at 7.5 percent,
the highest rate since September 1992.
"It's going to be tough to get anything really going before
we get to that jobs report on Friday," said Marc Pado, U.S.
market strategist at Cantor Fitzgerald & Co in San Francisco.
"It's looming like a dark cloud."
(Additional reporting by Ellis Mnyandu; Editing by Leslie
Adler)
