Wall Street rises modestly after testing support level

NEW YORK (Reuters) - U.S. stocks were slightly higher in late morning trading on Wednesday, as the S&P 500 tested a key support level after three sessions of declines.

The benchmark S&P index hit a session low of 1,978.63, just above the 50-day moving average support level of around 1,976, before turning higher. The index had fallen below its 14-day moving average, an indicator of short-term momentum, on Monday for the first time since Sept. 15.

"They are trying to hold in the 1,980s and not break that support and close below it," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"There is clearly weakness developing here, there is definitely selling pressure coming in, it?s a matter of (whether they can) hold that support point coming into the end of the quarter."

Providing support was a renewed pledge by European Central Bank President Mario Draghi to keep monetary policy loose for an extended period to push inflation in the euro zone closer to the targeted two percent level.

The Dow Jones industrial average <.DJI> was rising 34.52 points, or 0.2 percent, to 17,090.39, the S&P 500 <.SPX> was gaining 3.88 points, or 0.2 percent, to 1,986.65 and the Nasdaq Composite <.IXIC> was adding 15.70 points, or 0.35 percent, to 4,524.39.

Bed, Bath & Beyond shares were up 6.3 percent at $66.67 as the best performer on the S&P 500 after the home furnishings retailer reported better-than-expected quarterly revenue, lifting the S&P retail index <.SPXRT> up 0.4 percent.

New home sales jumped 18 percent to a seasonally adjusted annual rate of 504,000 units in August, well above the 430,000 units forecast and the highest level since May 2008.

Despite the upbeat data, housing stocks <.HGX> were little changed to add just 0.05 percent, weighed by a 5.7 percent drop in KB Home to $16 after its third-quarter earnings and revenue fell short of estimates.

Accenture shares were off 1.4 percent to $78.47 after posting fourth-quarter results and forecasting first-quarter revenue largely below analysts' expectations.

The largest percentage gainer on the New York Stock Exchange was Green Dot , which surged 11.64 percent after launching its checking account product at WalMart , while the largest percentage decliner was GrafTech , down 22.73 percent.

Declining issues were outnumbering advancing ones on the NYSE by 1,497 to 1,392, for a 1.08-to-1 ratio on the downside; on the Nasdaq, 1,492 issues were rising and 1,002 falling for a 1.49-to-1 ratio favoring advancers.

The benchmark S&P 500 index was posting two new 52-week highs and 11 new lows; the Nasdaq Composite was recording 11 new highs and 84 new lows.

(Editing by Bernadette Baum)

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