Wall St up as tech rally offsets Fannie, Freddie : US Business

By Walter Brandimarte

NEW YORK (Reuters) - Stocks were slightly higher in choppy trade on Wednesday as strong results from Hewlett-Packard triggered a rally in the technology sector that offset a slump in shares of Fannie Mae and Freddie Mac to more than 17-year lows.

HP's quarterly profit rose a forecast-beating 14 percent, raising hopes that demand from abroad will support technology spending, despite weakness in the United States. Shares of the world's largest computer maker jumped 5.8 percent to $46.23 and were the main boost for both the Dow and the S&P 500.

Financials also rebounded from Tuesday's sell-off as U.S. crude oil prices fell about 50 cents per barrel, supporting hopes inflation will ease and interest rates will remain low, helping the bank sector.

But shares of housing finance giants Fannie Mae and Freddie Mac plunged on growing concerns that a possible government bailout might dilute shareholder value.

"Until that issue gets resolved you'll continue to have that uncertainty, and it will be hard for the market to make any progress in that atmosphere," said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm in Toledo, Ohio.

The Dow Jones industrial average <.DJI> rose 32.73 points, or 0.29 percent, at 11,381.28, while the Standard & Poor's 500 Index <.SPX> gained 2.70 points, or 0.21 percent, at 1,269.39. The Nasdaq Composite Index <.IXIC> edged up 3.69 points, or 0.15 percent, at 2,388.05.

Shares of Fannie Mae, the biggest U.S. provider of housing finance, fell 19.1 percent to $4.86 after falling as low as $4.74. Shares of Freddie Mac fell 23.5 percent to $3.19, after trading as low as $3.15.

The rise in shares of HP, a Dow component, lent support to other big-cap technology stocks, including Apple , which was a top boost to the Nasdaq, rising 0.9 percent to $175.20.

Research In Motion Ltd shares gained 3.5 percent to $130.44 after Citigroup reiterated its "buy" rating on stock of the BlackBerry maker, and said it thought the company's new Bold smartphone was a strong product.

Despite the fall in oil prices, energy shares posted strong gains, supporting the S&P 500. Shares of oil producer and refiner Hess Corp climbed 2.7 percent to $101.14, while ConocoPhillips rose 0.98 percent to $80.03.

"To me, the market has now recognized that oil services stocks and equipment stocks sold off more than they should have." said Michael Koskuba, portfolio manager and analyst with Victory Capital Management. "Now they are finally recognizing the strong fundamentals that those stocks have despite what the price of oil is on a weekly basis."

On the downside, concerns about consumer weakness sent shares of big manufacturers down. General Electric fell 1 percent to $28.42 while Textron Inc lost 3.1 percent at $38.79.

(Additional reporting by Steven C. Johnson; Editing by Leslie Adler)

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