U.S. Stocks Pull Mostly Higher As Financials Climb

NEW YORK (MarketWatch) -- U.S. stocks turned again on Tuesday -- this time mostly higher -- as financials and consumer discretionary shares gained in the wake of the government's latest move to help revive the ailing economy.

"If the Fed and the Treasury are backing the U.S. financial system, who is backing the U.S.?" asked Tony Crescenzi, bond strategist at Miller Tabak. "For now, investors are putting this question aside and believing that such doomsday scenarios are a low probability."

After an initial triple-digit rise, the Dow Jones Industrial Average was lately up 14.97 points to 8,458.36, with 15 of its 30 components posting gains, with shares of J.P. Morgan Chase & Co. , rising 8.2%.

General Motors Corp. was among the Dow's laggards, with shares of the automaker sliding 4.5%.

Also weighing on the Dow, shares of Hewlett-Packard Co. fell 5.5% amid speculation by some analysts that the technology company was overly optimistic in maintaining its relatively strong outlook for 2009. .

The S&P 500 added 4.54 points to 856.35, as telecommunication services, financials and consumer discretionary shares fronted gains among the index's 10 industry groups.

Consumer staples and information technology shares proved the late-session laggards.

The technology-heavy Nasdaq Composite fell 10.53 points to 1,461.49.

Volume on the New York Stock Exchange topped 1.1 billion, and advancers edged past decliners 3 to 2. On the Nasdaq, 707 million shares traded, and decliners topped advancers 7 to 6.

Pay it back

Before the opening bell, the Federal Reserve unveiled a plan to lend up to $200 billion to back the issuance of debt, including student, auto and credit-card loans as well as those backed by the Small Business Administration. .

That announcement overshadowed data that showed the U.S. economy contracting at a 0.5% annual rate in the third quarter, slightly faster than initially estimated.

The GDP data helped spark a rally in Treasury prices, pushing yields lower. .

A separate report showed home prices in 20 major cities falling by 1.8% in September from the month before, and by a record 17.4% from the prior year. .

Crude-oil futures fell early as concerns over a sharp slowdown in energy demand weighed on sentiment. Crude for January delivery fell $3.73 to $50.77 a barrel.

Falling gas prices bolstered consumer sentiment in November, according to the Conference Board's latest monthly survey, which showed confidence climbed from a record low in October.

"While the bounce in consumer confidence this morning is encouraging, with the labor market continuing to deteriorate, the economic data likely to weaken further in the near term, and the volatility in financial markets expected to persist -- at least through year end -- the confidence figure could resume its decline in coming months," said Michelle Girard, U.S. strategist at RBS Greenwich Capital.

In another illustration of the banking sector's troubles, the Federal Deposit Insurance Corp. reported bank loan losses climbed during the third quarter, but the reserves set aside for future problems didn't keep pace. .

Meat-packer Hormel Foods Corp. reported solid fourth-quarter sales growth, but it also said losses on an investment trust dragged profits down.

Home builder D.R. Horton Inc. said its fourth-quarter loss swelled to $800 million, mostly due to unsold inventory and big losses on land disposal. .

Overseas, most Asian markets gained.

Stocks in Europe reversed off early lows to edge higher. .

On Monday, U.S. stocks climbed for a second straight session as the government backed more than $300 billion of Citigroup Inc. assets and President-elect Barack Obama formally unveiled his economic team. .

On Tuesday, Obama named Peter Orszag, a Washington insider and protégé of Robert Rubin, as his budget chief, while saying hs first priority would be to get the economy back on track.

By Kate Gibson