* Some life insurers qualify for TARP funds

* Bed Bath & Beyond up after results beat expectations

* Dow up 0.6 pct, S&P up 1.2 pct, Nasdaq up 1.9 pct * For up-to-the-minute market news click [STXNEWS/US] (Adds credit downgrade of Berkshire Hathaway after the bell)

By Leah Schnurr

NEW YORK, April 8 (Reuters) - U.S. stocks snapped a two- day slide on Wednesday on news the government is shoring up life insurers and optimism about consumer spending after Bed Bath & Beyond Inc (BBBY.O: Quote, Profile, Research) reported a better-than-expected profit.

Life insurers, whose capital base has been eroded by falling markets, have met requirements for government funds, the U.S. Treasury said. The news lifted shares of insurance companies, including Prudential Financial (PRU.N: Quote, Profile, Research), which was up nearly 8 percent. For more see [ID:nN08522342]

But in the latest sign of the economic downturn's impact, Moody's Investors Service stripped Warren Buffett's Berkshire Hathaway (BRKa.N: Quote, Profile, Research)(BRKb.N: Quote, Profile, Research) of its top rating of Aaa after the closing bell, citing the recession and the severe decline in stocks. [ID:nN08633004].

The Nasdaq surged nearly 2 percent on hopes that a recovery in business spending will boost tech profits and after Bed Bath & Beyond (BBBY.O: Quote, Profile, Research) jumped 24.3 percent to $31.70 on sales that were not as bad as feared in the last quarter.

"The mood is improving that maybe the economy will come back sometime, and both consumer discretionary and tech are cyclical," said Al Goldman, chief market strategist at Wachovia Securities in St. Louis.