Dow, S&P up on Fed, mortgage plan; Nasdaq dips

File photo of the facade of the New York Stock Exchange, April 4, 2007. The Dow and the S&P 500 rose on Friday after Federal Reserve Chairman Ben Bernanke's comments increased expectations for an interest-rate cut, but Dell Inc's disappointi

By Ellis Mnyandu

NEW YORK (Reuters) - The Dow and the S&P 500 rose on Friday after Federal Reserve Chairman Ben Bernanke's comments increased expectations for an interest-rate cut, but Dell Inc's disappointing outlook dragged on the Nasdaq.

A report that the U.S. Treasury will soon unveil a plan to help stem the subprime mortgage crisis also buoyed sentiment, with shares of mortgage-related companies and banks among the session's biggest winners.

Shares of JPMorgan Chase & Co, the No. 3 U.S. bank, featured among the standouts on both the Dow and the S&P 500, with a gain of more than 4 percent.

Shares of No. 1 U.S. bank Citigroup Inc and those of Bank of America Corp, the No. 2 U.S. bank, each rose more than 4 percent, while those of Countrywide Financial Corp, the nation's largest mortgage lender, gained more than 20 percent.

"The Fed wants to see that the mortgage interest rate resets during the course of 2008 are not as onerous or as crippling as they can be," said Georges Yared, founder and chief investment officer of Yared Investment Research in Wayzata, Minnesota. "The Fed is acting in defense of the consumer."

The Dow Jones industrial average was up 61.61 points, or 0.46 percent, at 13,373.34. The Standard & Poor's 500 Index was up 11.01 points, or 0.75 percent, at 1,480.73. The Nasdaq Composite Index was down just 0.76 of a point, or 0.03 percent, at 2,667.37.

Earlier the indexes had been much higher, and at one time the Dow's advance had the blue-chip index eyeing its biggest weekly advance since March before backing off its highs as technology shares capped the broader market.

On a monthly basis, the S&P 500 still appeared on course for its worst monthly slide in five years despite the rebound of the last three sessions.

Federal Reserve Chairman Bernanke said late on Thursday a resurgence in financial strains in recent weeks had dimmed the outlook for the U.S. economy, which raised speculation that policy-makers are willing to lower benchmark rates again. Stocks had rallied earlier this week after Fed Vice Chairman Donald Kohn made similar remarks.

The Fed's policy-setting meeting is scheduled for Dec. 11.

Among banks, JPMorgan shares rose 4.9 percent to $45.79 on the New York Stock Exchange, while Bank of America shares climbed 3.5 percent to $46.19. Citigroup shares jumped 3.9 percent to $33.54. The S&P financial index was up 3.2 percent.

Beaten-down mortgage-related shares such as Countrywide and Freddie Mac also advanced after sources familiar with the situation said the Treasury is close to announcing a plan it is brokering with mortgage industry leaders to hold interest payments steady for many subprime borrowers facing foreclosure.

Countrywide shares shot up 20.3 percent to $11.19 on the NYSE, while shares of Freddie Mac, the No. 2 U.S. home financing provider, gained 12.8 percent to $33.30.

But on the Nasdaq, Dell's outlook soured sentiment, tripping high-flying bellwethers such as Blackberry maker Research In Motion and Apple, the maker of the iPhone and the iPod.

Shares of Dell, the No. 2 computer maker, notched their biggest tumble in seven years, falling more than 13 percent to $24.32. RIM shares lost 6 percent to $114.81, while Apple shares declined 1.1 percent to $182.35.