* Stalled U.S. rescue plan sparks anxiety
* Regulators seize WaMu in biggest U.S. bank collapse
* RIM leads tech rout after profit warning
* Dow up 1.1 pct, S&P up 0.3 pct, Nasdaq off 0.2 pct
(Updates to close)
By Steven C. Johnson
NEW YORK, Sept 26 (Reuters) - U.S. stocks ended mostly
higher on Friday as big bank shares staged a late rally on
hopes lawmakers would hammer out an agreement on a $700
billion financial-sector rescue plan this weekend.
But tech shares took it on the chin, keeping the Nasdaq in
the red, after a disappointing outlook from BlackBerry maker
Research in Motion. considered a bellwether for the sector.
Friday's market gains were in sharp contrast to the rest
of the week, which was the worst for the benchmark S&P 500
since May.
Trading volume was light, with most traders glued to the
increasingly acrimonious debate in Washington over Treasury's
plan to mop up bad mortgage debt from bank balance sheets to
get them lending again.
Shares of JPMorgan Chase <JPM.N>, up 11 percent and Bank
of America <BAC.N>, up nearly 7 percent, ranked among the top
gainers in both the Dow and the S&P 500. An S&P index of
financial shares <.GSPF> rose 3.2 percent.
"Wall Street is banking on a definitive agreement in place
before markets open on Monday," said Fred Dickson, director of
retail research at D.A. Davidson & Co in Lake Oswego, Oregon.
The Dow Jones industrial average <> was up 121.07
points, or 1.10 percent, at 11,143.13. The Standard & Poor's
500 Index <.SPX> was up 4.09 points, or 0.34 percent, at
1,213.27. But the Nasdaq Composite Index <> was down 3.23
points, or 0.15 percent, at 2,183.34.
The fate of the rescue plan pushed nearly everything else
to the background on Friday, including U.S. bank regulators'
move to close Washington Mutual <WM.N> late on Thursday, the
largest U.S. bank failure in history.
"It's amazing that WaMu is secondary today, but the
bailout package is the pressing issue," said Alan Lancz,
president of Alan B. Lancz & Associates Inc, an advisory firm
in Toledo, Ohio. "Something has to get done to put a floor
under the downward spiral of mortgage assets."
On Thursday, bank regulators closed Washington Mutual
<WM.N>, which had $307 billion of assets and $188 billion of
deposits, and brokered a sale of the thrift's assets to
JPMorgan Chase.
Shares of JPMorgan Chase shot up 11 percent to $48.24,
while Bank of America added 6.8 percent to $36.70.
JPMorgan's larger-than-expected $10 billion stock sale to
cap its purchase of Washington Mutual also helped boost
confidence in financial shares.
Wachovia <WB.N> shares tumbled 27 percent to $10 but had
been trading even lower before the New York Times reported the
bank had started early deal talks with Citigroup <C.N>. For
more, see [] Earlier, Wachovia hit a session low at
$8.03 on the New York Stock Exchange.
In contrast, Citi shares rose 3.8 percent to $20.15.
Technology companies struggled on Friday after Research
In Motion <RIM.TO><RIMM.O> warned that quarterly profit will
fall short of Wall Street's forecasts. RIM shares fell 27.5
percent, or $26.77, to $70.76. It was the top-weighted drag on
the Nasdaq 100 <>.
Apple Inc <AAPL.O>, maker of the iPhone and iPod, shed 2.8
percent, or $3.69, to $128.24. Apple's decline also hurt the
Nasdaq.
The government's bailout plan has run into stiff
resistance on Capitol Hill, mostly from Republican lawmakers
who have proposed an alternative that provides for no
government money up front. For more, see [] and
[].
It's been a tough sell on Main Street, too, where voters
see it as a taxpayer-funded bailout of wealthy Wall Street.
President George W. Bush said Congress would eventually
agree on a plan, but investors said the market remained
nervous about the outlook for corporate earnings and the
health of the broader U.S. economy.
"The plan is crucial to keeping the economy afloat, but it
isn't going to turn around the housing crisis or pump new life
into the economy," Dickson said. "Those are issues we will
have to deal with."
Earlier, the Commerce Department said GDP, the measure of
total goods and services output within U.S. borders, expanded
at an annual rate of 2.8 percent in the April-June quarter,
down from a rate of 3.3 percent it estimated a month ago.
Giri Cherukuri, head trader at OakBrook Investments in
Linsdale, Illinois, said investors should be prepared for the
market to turn lower once a rescue deal is finally reached as
focus returns to the weak economy and profit outlook.
About 1.19 billion shares changed hands on the New York
Stock Exchange, below last year's estimated daily average of
roughly 1.90 billion, while on Nasdaq, about 1.98 billion
shares traded, also below last year's daily average of 2.17
billion.
Declining stocks outnumbered advancing ones on the NYSE by
2 to 1. On the Nasdaq, decliners outran advancers by a ratio
of about 1.4 to 1.
(Additional reporting by Kristina Cooke; editing by Jan
Paschal)
