Stocks rise on financials, energy, GE

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By Chuck Mikolajczak

NEW YORK (Reuters) - Stocks rose on Tuesday as investors scooped up beaten-down shares after Monday's sell-off and news that bellwether General Electric would keep its dividend unchanged in a tough economy.

But stocks pared gains after General Motors reported U.S. vehicle sales declined by 41 percent in November.

The focus remained on bargain hunting on financial services shares and the energy sector.

GE shares rose nearly 11 percent and gave the biggest boost to the Dow industrials.

"People are looking at GE and saying, hey well the dividend yield is pretty good and they are sticking with their earnings estimates, although it's at the lower end," said Cummins Catherwood, managing director at Boenning & Scattergood in West Conshohocken, Pennsylvania.

Energy stocks, currently the cheapest S&P sector in relation to earnings, rebounded despite a dip in oil prices to below $48 a barrel. Chevron gained nearly 4 percent to $74.79 while Exxon Mobil climbed over 3 percent to $76.59.

Financial stocks, after suffering their worst one-day loss on record on Monday, also rallied after Federal Reserve Chairman Ben Bernanke signaled on Monday that policy-makers were determined to stabilize the economy and markets.

The Dow Jones industrial average <.DJI> rose 52.33 points, or 0.64 percent, at 8,201.42. The Standard & Poor's 500 Index <.SPX> gained 9.18 points, or 1.12 percent, at 825.39. The Nasdaq Composite Index <.IXIC> added 18.53 points, or 1.33 percent, at 1,416.60.

The market was climbing back from Monday's slide when the S&P 500 fell to a level testing 11-year lows.

GE shares climbed to $17.02 on the New York Stock Exchange after the company narrowed its earnings forecast but kept them in-line with analysts estimates and reiterated its plan to maintain a dividend payout in 2009 while it attempts to restructure its finance arm, GE Capital.

GM shares fell to $4.51, while Ford rose 2 percent to $2.60.

Executives of the big-three U.S. automakers, including Chrysler, are due to present Washington with their plans to justify a $25 billion bailout as worries about possible bankruptcy persist.

As part of its plan, Ford said it expected its overall and North American automotive business to break even or be profitable in 2011 and did not anticipate a liquidity crisis next year, barring a bankruptcy of one of its domestic rivals.

Even so, worries about the deepening economic slump fueled some caution, along with a broker downgrade of diversified manufacturer 3M Co , down 5 percent at $59.23.

(Editing by Kenneth Barry)

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