By Leah Schnurr
NEW YORK (Reuters) - The Dow and S&P 500 edged higher on Tuesday, buoyed by the U.S. government's plan to pump money into banks, but worries over the credit crunch's impact on corporate results kept the Nasdaq lower.
Financial shares climbed on the Treasury Department's plan to inject $250 billion in major banks to stabilize the financial system in hopes of averting further damage to the economy. Among the gainers, Morgan Stanley surged more than 20 percent.
Shares of Intel were among the top drags on Nasdaq before quarterly results due after the bell. Intel was down more than 4 percent at $16.19.
Disappointing results from soft drink company PepsiCo fueled worries over the prospect of weak earnings results to come. The miss also deepened concerns over how consumer spending will hold up in the face of declines in home values, stocks and tighter credit.
Shares of Pepsi tumbled more than 9 percent to $55.97.
The market's attention is shifting away from the credit crisis and focusing more on corporate fundamentals, Craig Peckham, equity trading strategist at Jefferies & Company in New York, said.
"The question really becomes has the market priced in adequately the high probability of downward revisions to earnings expectations and earnings guidance as we come through earnings season," said Peckham.
The Dow Jones industrial average gained 15.53 points, or 0.17 percent, at 9,403.14. The Standard & Poor's 500 Index rose 3.28 points, or 0.33 percent, to 1,006.63. The Nasdaq Composite Index was off 32.20 points, or 1.75 percent, to 1,812.05.
Citigroup and Bank of America were among the biggest percentage gainers on the Dow. Citigroup gained 17 percent to $18.43, while Bank of America surged 14.1 percent to $26.01.
They are among the institutions widely reported to be included in the Treasury Department's plan to take equity stakes in banks to shore up up the battered financial system.
The department did not name the nine banks that will initially be participating in the program.
On a positive earnings note, Johnson & Johnson beat expectations with strong sales of consumer products and medical devices. The company's shares rose 2.7 percent to $64.36.
(Editing by Kenneth Barry)
