(Refiles to fix typo in headline)
* Fed plan to aid consumer lending spurs optimism
* U.S. GDP shrinks more than previously thought
* Cisco tumbles on news of planned shutdown
* Dow up 0.4 pct, S&P 500 up 0.7 pct, Nasdaq off 0.5 pct
* For up-to-the-minute market news, please click on
(Updates to close)
By Charles Mikolajczak
NEW YORK, Nov 25 The Dow and S&P 500 gained on
Tuesday on optimism that the Federal Reserve's latest rescue
package could revive the sagging housing market and free up
The Dow had its first positive three-day run since late
August, while the S&P rose three straight sessions for the
first time since mid-September.
But the Nasdaq slid as technology stocks fell on more
immediate concerns that demand may be weakening after
bellwether Cisco Systems (CSCO.O) said it will close most of
its operations in the United States and Canada for five days
in an effort to cut costs. For details, see [ID:nN25270787]
Under the Fed's latest plan, the U.S. central bank will
buy billions of dollars worth of debt and mortgage-backed
securities to increase the flow of credit for mortgages,
student loans, car loans and credit cards. [ID:nN25276977]
The Fed's move to generate consumer lending lifted
financial stocks, with JPMorgan (JPM.N) up nearly 8 percent at
$29.77, and those of retailers, with Wal-Mart Stores(WMT.N),
up 3.6 percent at $54.68.
"The Fed move today is another step to try to unfreeze the
credit markets and provide more lending activity for consumers
and businesses," said Michael Sheldon, chief market strategist
at RDM Financial in Westport, Connecticut.
"Part of the goal in buying mortgage assets from Fannie and
Freddie is probably aimed at lowering mortgage rates, which
down the road will help stabilize the housing market."
The Dow Jones industrial average .DJI gained 36.08
points, or 0.43 percent, to 8,479.47. The Standard & Poor's
500 Index .SPX rose 5.58 points, or 0.66 percent, to 857.39.
But the Nasdaq Composite Index .IXIC shed 7.29 points, or
0.50 percent, to 1,464.73.
In spite of the optimism stirred by the Fed's plan, the
data continued to paint a poor picture of the economic
A government report showed the U.S. economy contracted at
a faster rate in the third quarter than originally estimated
as consumer spending fell at the sharpest rate in 28 years.
The tech-heavy Nasdaq was weighed down as the first plant
shutdown in Cisco's history raised concerns about demand,
ending the Nasdaq's two-day winning streak.
Cisco's shares tumbled 6 percent to $15.42, while
Microsoft's stock slid 3.4 percent to $19.99 and shares of
Apple, the maker of the iPhone, declined 2.3 percent to
$90.80. Shares of BlackBerry maker Research In Motion
RIM.TORIMM.O slid 8.3 percent to $41.50.
Shares of computer maker Hewlett-Packard (HPQ.N) dropped
almost 6 percent to $33.60 on the New York Stock Exchange
despite posting a solid quarterly profit report and giving an
upbeat outlook late Monday. The stock was the largest weight
on the Dow and helped limit its advance.
The semiconductor index .SOXX was down 2.2 percent.
Technology is considered to be more vulnerable to slowing
consumer and business spending, as well as the downturn from
Before Wall Street's opening bell, the Commerce Department
said third-quarter gross domestic product shrank 0.5 percent
on a sharp drop in consumer spending. That was a downward
revision from the government's first estimate that GDP had
contracted 0.3 percent in the third quarter.
An S&P index of financial stocks .GSPF climbed 2.5
Volume was active on the NYSE, where about 1.88 billion
shares changed hands, near last year's estimated daily average
of 1.90 billion. On the Nasdaq, about 2.50 billion shares
traded, above last year's daily average of 2.17 billion.
Advancers outnumbered decliners on the NSYE by a ratio of
2 to 1, while on the Nasdaq, about five stocks rose for every
four that fell.
(Editing by Jan Paschal)