* JPMorgan, United Technologies spark profit optimism
* Financials extend prior session's advance
* Oil rebounds after two days of declines
* Factory activity shrinks in U.S. Mid-Atlantic region
(Updates to midmorning)
By Ellis Mnyandu
NEW YORK, July 17 (Reuters) - U.S. stocks were little
changed on Thursday as a rebound in oil prices and weak
regional economic data offset stronger-than-expected earnings
from financial services companies.
Investors snapped up shares of embattled banks after
JPMorgan Chase & Co's <JPM.N> reported a stronger-than-expected
profit a day after Wells Fargo & Co's <WFC.N> results
catapulted financial stocks to their biggest gains in nearly
two decades.
But oil prices reversed two days of deep losses, sparking
caution about inflation and consumer spending.
Shortly after the open, the Dow and the S&P 500 pared gains
and the Nasdaq briefly turned negative following a report that
showed factory activity shrunk in July in the U.S. Mid-Atlantic
region.
"I just think there's still plenty of fear out there. A one
day rebound is not going to change the mood," said Scott Wren,
senior equity strategist at Wachovia Securities. "You're going
to need continued good news over this earnings period to put in
a bottom."
The Dow Jones industrial average <> edged up 16.69
points, or 0.15 percent, to 11,255.97. The Standard & Poor's
500 Index <.SPX> gained 2.09 points, or 0.17 percent, to
1,247.45. The Nasdaq Composite Index <> added 1.74 points,
or 0.08 percent, to 2,286.59.
Shares of JPMorgan, the No. 3 U.S. bank, jumped more than 9
percent, making the stock the top boost on the S&P 500 and the
No. 2 boost on the Dow, behind United Technologies <UTX.N>, up
more than 5 percent.
Fannie Mae <FNM.N> and Freddie Mac <FRE.N> surged nearly 20
percent, adding to sharp jumps a day earlier, after Freddie Mac
completed its second successful debt sale this week. The $3
billion note sale helped calm fears about the strength of the
two housing finance companies after the announcement of a U.S.
rescue plan.
United Technologies, a diversified manufacturer posted
results that also topped Wall Street's forecasts.
U.S. crude <CLc1> rose $1.23 to $135.82 a barrel as a fresh
cut to Nigerian output on Thursday underscored the risk to
supplies.
In other news on the economy, a government report showed a
surprise jump in U.S. housing starts, but the Commerce
Department said the gain in June was due chiefly to a change in
New York City building codes.
The S&P financial index <.GSPF> jumped more than 3 percent.
JPMorgan shares rose to $39.79, and United Technologies
climbed $63.88. Another standout among financials was Bank of
America Corp <BAC.N>, up 10.4 percent at $25.01 on the New York
Stock Exchange.
Shares of Coca-Cola <KO.N> declined more than 3 percent to
$50.50 as lagging volume growth overshadowed the soft drink
maker's stronger-than-expected profit.
On Nasdaq, a 14.4 percent slide to $24.05 in the shares of
Internet auctioneer and retailer eBay <EBAY.O> kept a lid on
gains, a day after the company sounded a cautious tone on its
outlook.
(Additional reporting by Kristina Cooke, Editing by Kenneth
Barry)
