NEW YORK - WALL Street showed some signs of stability on Tuesday as investors, heartened by government plans to aid consumer lending companies, selectively bought more stocks following a huge two-day rally. Gains in blue chips gave the Dow Jones industrials and the Standard & Poor's 500 index their first triple-session advance in more than two months.

Tech stocks lagged the market, sending the Nasdaq composite index lower, as investors bet that businesses will continue slashing capital spending in a recession. Some selling was widely expected after a two-day rally that sent the Dow up nearly 900 points, but the fact that the market performed so well - a contrast to its behavior after past rallies - was an indication that investors are regaining some of the confidence that has been decimated for months by bad economic news.

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Three straight days of gains for the Dow and S&P indicates an underlying strength in the market, particularly in the face of a weak technology sector, said Mr Richard E. Cripps, chief market strategist for Stifel Nicolaus.

It's 'probably too premature' to say that the market has already hit its lowest level of the downturn, he said. 'This bottoming phase is going to be a process.' Many analysts thought the market had reached a bottom weeks ago after the devastating losses of early October, only to see Wall Street take an even sharper dive just last week.

Investors were encouraged on Tuesday after the Treasury Department and the Federal Reserve said they planned to provide US$800 billion (S$1.2 trillion) to help unfreeze the market for consumer debt and to make mortgage loans cheaper and more available. The programme is aimed at reviving moribund credit markets.

The government, while looking to reduce fear in the credit markets, is eager to see lenders including credit card companies, student loan issuers and car purchase financers resume more normal levels of lending to help stimulate the economy. Since September, when credit markets first froze, financial institutions have been hesitant to hand over money for fear they won't be repaid. That, in turn, has made it harder for businesses and consumers to borrow.

'We're getting more clarity about the federal assistance across the board, and I think that's being well received,' said Mr Arthur Hogan, chief market analyst at Jefferies & Co. 'Most of the overhangs in the market are getting answers.'

The Dow rose 36.08, or 0.43 per cent, to 8,479.47. The index was up 164 points earlier in the session but also fell 161. The Dow last put a three-day advance together on Aug 26-28.

Broader indexes were mixed. The S&P 500 rose 5.58, or 0.66 per cent, to 857.39, giving the index its first three-day rise since Sept 10-12. The Nasdaq composite index, hurt by signs that companies are cutting back on technology spending, fell 7.29, or 0.50 per cent, to 1,464.73.

Still, advancing issues were ahead of decliners on the Nasdaq Stock Market by 5 to 4. On the New York Stock Exchange, advancers were ahead by more than 2 to 1 on volume of 1.7 billion shares.

The government's latest effort to combat the fear hobbling the marketplace overshadowed a report that the nation's overall economic output shrank in the July-September quarter faster than initially estimated as consumers slashed spending by the most in 28 years.

The Commerce Department said third-quarter gross domestic product declined at a 0.5 per cent annual rate, outpacing the 0.3 per cent first estimated a month ago. Still, Wall Street had expected the number would worsen, so the report didn't catch the market by surprise. It was the worst reading since growth fell at a 1.4 per cent pace in the third quarter of 2001, which was during the last recession.

And, ahead of the holiday shopping season, investors got some good news about consumers. The Conference Board said its Consumer Confidence Index unexpectedly rose to 44.9 in November, up from a revised 38.8 in the previous month. Last month's reading was the lowest since the research group started tracking the index in 1967.

Economists expected the index to slip to 37.9.

The business research group said Americans' views on the economy still remain the gloomiest in decades. Consumer spending, always a concern on the Street, has taken on greater importance because the economy cannot expand unless consumers are spending - and they've shown increasing reluctance the past few months, a troubling sign with the holiday season approaching.

Treasury bonds fell during the session after most investors focused on the stock market. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.11 per cent from 0.01 per cent late on Monday. Investors worried about the economy and bad debt have flooded into safest areas of the credit markets, driving down yields, but some of their anxiety eased on Tuesday.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.08 per cent from 3.33 per cent late on Monday.

The dollar was mixed against other major currencies, while gold prices fell. Light, sweet crude fell US$3.73 to settle at US$50.77 a barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies rose 6.38, or 1.46 per cent, to 443.18. -- AP