Techs lift Wall Street on spending optimism
NEW YORK (Reuters) - Stocks rose on Tuesday led by a jump in technology bellwethers including Microsoft Corp (MSFT.O) on hopes the proposed $700 billion financial sector bailout would help loosen up lending and boost business and consumer spending.
Even so, investors were cautious and trading was choppy, a day after the broader market slid nearly 4 percent as investors fretted about the economy's outlook.
The debate over the measure to mop up bad mortgage debts from the banks' balance sheets and stabilize the financial sector intensified before Congress in Washington, with Federal Reserve Chairman Ben Bernanke appearing before a congressional committee.
Microsoft (MSFT.O) , a Dow component, jumped nearly 3 percent, putting it among the top boosts to both the Nasdaq and the S&P 500.
Computer maker Hewlett-Packard (HP.N) jumped more than 2 percent. Investors also snapped up shares of big manufacturers, including plane maker Boeing (BA.N) , up 2.4 percent.
The loosing up of credit will help shore up the economy, analysts said.
"It does seem like both sides are coming together and want to get a deal done quickly that will inject a lot of capital into the economy and free up lending," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.
"Lending had ground to a halt in the credit markets. If they can free up lending as a result of this package, I think that will spur business. If you want to capitalize on a recovery in the fourth quarter, you're going to go into growth stocks and that's in tech."
The Dow Jones industrial average .DJI climbed 96.38 points, or 0.87 percent, to 11,112.07. The Standard & Poor's 500 Index .SPX gained 10.87 points, or 0.90 percent, to 1,217.96. The Nasdaq Composite Index .IXIC rose 26.14 points, or 1.20 percent, to 2,205.12.
Microsoft shares rose to $26.15 on Nasdaq. The software maker on Monday announced plans of a $40 billion share repurchase and raised its quarterly dividend.
HP shares rose to $48.36 on the New York Stock Exchange, while shares of iPod and iPhone maker Apple Inc (AAPL.O) jumped more than 3 percent to $135.04.
Shares of financial services companies, including banks also headed higher, recovering from Monday's slide that drove the broader market down nearly 4 percent. Shares of JPMorgan Chase (JPM.N) climbed 2.5 percent to $41.79.
The S&P financial index was up 1.4 percent.
In prepared testimony to the Senate Banking committee, a copy of which was obtained by Reuters, Bernanke said, "Action by Congress is urgently required to stabilize the situation and avert what could otherwise be very serious consequences for our financial markets and our economy."
Led by Treasury Secretary Henry Paulson, officials are working on a solution to mop up hundreds of billions of dollars worth of bad mortgage debt on the books of financial institutions.
Paulson, will be joined by Bernanke, Securities and Exchange Commission Chairman Christopher Cox and James Lockhart, director of the Federal Housing Finance Agency, in testifying before the committee.
(Editing by Kenneth Barry)
