Wall Street extends rally to third day

NEW YORK — Wall Street showed some signs of stability Tuesday as investors, heartened by government plans to aid consumer lending companies, selectively bought more stocks following a huge two-day rally. Gains in blue chips gave the Dow Jones industrials and the Standard & Poor's 500 index their first triple-session advance in more than two months.

Tech stocks lagged the market, sending the Nasdaq composite index lower, as investors bet that businesses will continue slashing capital spending in a recession. Some selling was widely expected after a two-day rally that sent the Dow up nearly 900 points, but the fact that the market performed so well a contrast to its behavior after past rallies was an indication that investors are regaining some of the confidence that has been decimated for months by bad economic news.

Three straight days of gains for the Dow and S&P indicates an underlying strength in the market, particularly in the face of a weak technology sector, said Richard E. Cripps, chief market strategist for Stifel Nicolaus.

It's "probably too premature" to say that the market has already hit its lowest level of the downturn, he said. "This bottoming phase is going to be a process."

Many analysts thought the market had reached a bottom weeks ago after the devastating losses of early October, only to see Wall Street take an even sharper dive just last week.

Investors were encouraged Tuesday after the Treasury Department and the Federal Reserve said they planned to provide $800 billion to help unfreeze the market for consumer debt and to make mortgage loans cheaper and more available. The program is aimed at reviving moribund credit markets.

The government, while looking to reduce fear in the credit markets, is eager to see lenders including credit card companies, student loan issuers and car purchase financers resume more normal levels of lending to help stimulate the economy. Since September, when credit markets first froze, financial institutions have been hesitant to hand over money for fear they won't be repaid. That, in turn, has made it harder for businesses and consumers to borrow.

"We're getting more clarity about the federal assistance across the board, and I think that's being well received," said Arthur Hogan, chief market analyst at Jefferies & Co. "Most of the overhangs in the market are getting answers."

According to preliminary calculations, the Dow rose 36.08, or 0.43 percent, to 8,479.47. The index was up 164 points earlier in the session but also fell 161. The Dow last put a three-day advance together on Aug. 26-28.