US STOCKS-Wall St edges up as oil drops, financials gain

* Corporate earnings send mixed signals

* Fannie Mae and Freddie Mac up sharply

* Dow up 0.1 pct, S&P 500 up 0.3 pct, Nasdaq up 0.4 pct (Updates to early afternoon, changes byline)

By Kristina Cooke

NEW YORK, July 23 (Reuters) - U.S. stocks rose on Wednesday as financial shares climbed on hopes lawmakers will approve the rescue plan for mortgage finance companies Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) and the price of oil fell.

Corporate earnings sent mixed signals, with Boeing Co (BA.N: Quote, Profile, Research, Stock Buzz) reporting a bigger-than-expected drop in profit while AT&T (T.N: Quote, Profile, Research, Stock Buzz) posted quarterly results that showed stronger-than-expected wireless growth.

Oil prices fell more than $3 after government data showed a big increase in U.S. inventories of gasoline. Technology and retail shares mostly rose as lower oil eased concerns about the outlook for business and consumer spending.

Financial shares rose after President George W. Bush dropped a threat to veto a housing rescue bill, clearing the way for measures meant to shore up the worst U.S. home market since the Great Depression. Removal of the presidential veto threat spurred investors to snap up shares of Fannie and Freddie, which would receive an emergency government lifeline under the bill. The House was expected to approve the rescue package later on Wednesday.

Analysts also noted that given the Securities and Exchange Commission's clampdown on certain types of short selling in financial companies, hedge funds were reversing a popular trade, accelerating financial stocks' gains and oil's decline.