US STOCKS-HP lifts Wall St but S&P set for first down week of year
* Hewlett-Packard rallies after results, lifting tech shares
* Benchmark index fell about 2 percent in two previous sessions
* Abercrombie & Fitch leads decliners after disappointing results
* Indexes up: Dow 0.7 pct, S&P 0.6 pct, Nasdaq 0.7 pct
By Edward Krudy
NEW YORK, Feb 22 (Reuters) - U.S. stocks rebounded from two days of losses on Friday as Dow component Hewlett-Packard surged on strong results, but the S&P 500 index was on track to end a seven-week winning streak.
Hewlett-Packard Co jumped nearly 14 percent and was the top boost on both the Dow and S&P 500 after the personal computer maker's quarterly revenue and forecasts beat expectations.
HP's results come near the end of relatively strong earnings season in which 70 percent of S&P 500 companies beat analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters.
"Overall the earnings supports were better than expected in this cycle," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois. "We may see the market rising during the month of March."
The Dow Jones industrial average gained 93.67 points, or 0.67 percent, to 13,974.29. The Standard & Poor's 500 Index rose 9.03 points, or 0.60 percent, to 1,511.45. The Nasdaq Composite Index rose 21.45 points, or 0.68 percent, to 3,152.94.
Also helping stocks, Federal Reserve Chairman Ben Bernanke downplayed worries the Fed has fueled asset bubbles that could hurt the economy. Bernanke's view helped allay fears that the central bank may end its easy money policies.
Investors will be looking for Bernanke to reiterate those remarks, made in a private meeting with bond dealers and investors earlier this month but reported by Bloomberg on Friday, when he speaks before the Senate Banking Committee on Tuesday.
The S&P 500 shed 1.9 percent over the previous two sessions, its worst two-day drop since early November. The retreat was triggered when the Federal Reserve's meeting minutes for January suggested stimulus measures may be halted sooner than thought.
For the week, the S&P is off 0.5 percent and the Nasdaq is off 1.2 percent.
Fourth-quarter earnings for S&P 500 companies are estimated to have risen 6 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.
Marvell Technology Group Ltd forecast results this quarter that were largely above analysts' expectations. Marvell gained market share in the hard-disk drive and flash-storage businesses. The stock rose 4.4 percent to $9.88.
But with only a handful of companies left to report earnings, investors are looking ahead to the possibility of hefty automatic budget cuts that could happen on March 1.
A large option investor appears to be adjusting a bearish view on the SPDR S&P 500 Trust fund while locking in previously established gains, in a possible hedge prior to the automatic budget cuts.
"An institutional investor appears to be rolling down and increasing in size a defensive hedge timed to match the March 1 deadline for the sequester," said Henry Schwartz, president of options analytics firm Trade Alert.
Texas Instruments Inc raised its dividend by a third and boosted its stock buyback program, lifting shares 4.7 percent to $34. The PHLX semiconductor index gained 1.9 percent.
"Dividends growing are another way the market's level is justified, if not especially attractive at these levels," said Rex Macey, chief investment officer at Wilmington Trust in Atlanta, Georgia, who manages about $20 billion in assets.
On the downside, Abercrombie & Fitch dropped 5.1 percent to $46.55 after the clothing retailer reported a drop in fourth-quarter comparable sales, even as its latest quarterly earnings topped estimates.
Insurer American International Group Inc posted fourth-quarter results that beat analysts' expectations. Shares advanced 2.3 percent to $38.13.
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