Wall Street rises after auto aid package

NEW YORK (Reuters) - Stocks rose on Friday after the U.S. government said it would throw a $17.4 billion emergency lifeline to automakers grappling with falling consumer demand in the face of a year-long recession.

Shares of General Motors jumped 16 percent. A senior administration official said the government expects GM and Chrysler LLC to access the money immediately.

"The markets want some kind of resolve on the auto deal and at least this gets us into next year," said Frank Lesh, futures analyst and broker at FuturePath Trading LLC in Chicago.

"It really just buys them some time. We certainly didn't need any huge portion of unemployed into the market right now."

The Nasdaq outperformed the other indexes, boosted by gains in Oracle Corp and Research In Motion the day after both companies reported quarterly results that were better than lowered expectations.

The Dow Jones industrial average rose 151.49 points, or 1.76 percent, to 8,756.48. The Standard & Poor's 500 Index gained 16.83 points, or 1.90 percent, to 902.11. The Nasdaq Composite Index jumped 33.89 points, or 2.18 percent, to 1,586.26.

Investors had feared wide-reaching fallout from the potential failure of one of the three big Detroit automakers . The government loans would be called back if they cannot prove they are viable by March 31, an administration official said.

GM shot up 16.7 percent at $4.27, while rival Ford gained 6.3 percent to $3.02.

BlackBerry maker Research In Motion jumped more than 8 percent to $41.58. After the bell on Thursday, the company gave a better-than-expected growth forecast for its smartphone devices.

Oracle also gave a strong lift, rising 8.4 percent to $18.00, the day after the business software maker reported a drop in new sales that was not as bad as some had feared.

Beaten-down energy shares bounced back as the price of oil popped up after falling below $34 a barrel to its lowest in almost five years. Dow component Chevron broke a two-day losing streak to gain 1.6 percent to $74.19.

Building products maker and homebuilder Weyerhaeuser Co was the latest company to give a gloomy outlook, saying the housing slump and weakening pulp market would lead to significantly lower fourth-quarter earnings.

The company also cut its quarterly dividend, while its stock tumbled 5.5 percent to $35.10.

Late on Thursday, Standard & Poor's lowered the minimum value required for inclusion in its S&P 500 index for the second time in nearly three months, underscoring the rapidly shrinking capitalization of U.S. companies.

On the index, 148 companies fall short of the old minimum market cap of $4 billion, and 106 are below the new minimum of $3 billion. There are 202 companies below what had been the long-standing minimum of $5 billion.

(Additional reporting by Deepa Seetharaman; Editing by James Dalgleish)