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US STOCKS-Market rises on tech, retailer views; Alcoa slides

By REUTERS

* Tech shares advance after Monday's slide

* Nucor warns on outlook, hurting steelmakers

* Alcoa drops after slashing dividend, spending

* Dow 0.2 pct; S&P 500 up 0.7 pct; Nasdaq up 1.2 pct

(Updates to late morning)

By Ellis Mnyandu

NEW YORK (Reuters) - U.S. stocks rose in choppy trade Tuesday as upbeat broker comments on technology bellwether Cisco Systems and retailers like Home Depot offset news of a dividend cut at Alcoa Inc.

Home Depot shares were among the Dow's top boosts, rising more than 6 percent to $21.45 after a brokerage raised its view on the stock and several other major retailers to "buy."

Shares of networking equipment maker Cisco jumped 2.3 percent to $15.82 after Goldman Sachs added the stock to its conviction buy list. Cisco was among Nasdaq standouts, along with Apple Inc , up nearly 3 percent to $97.84.

"I think there's just a lot of bad news priced into those stocks. At some point the consumer will stop saving and start spending again," said Kevin Kruszenski, head of Listed Trading, KeyBanc Capital Markets in Cleveland, Ohio.

"Tech has been a pretty resilient sector so far this year. At some point there's a replacement cycle that comes into being," he said. "Technology is also used to replace workers. Most companies are shedding jobs but not necessarily shedding computers."

The Dow Jones industrial average rose 16.65 points, or 0.23 percent, to 7,233.62. The Standard & Poor's 500 Index added 5.04 points, or 0.67 percent, to 758.93. The Nasdaq Composite Index climbed 16.55 points, or 1.18 percent, to 1,420.57.

The market was also underpinned by optimism stemming from a report that showed a surprise jump in February housing starts. The Dow Jones home construction index was up nearly 5 percent.

But dampening the market was aluminum producer Alcoa's decision to slash its dividend and curtail spending, which underscored the impact of the economic slump. Alcoa's stock was down almost 9 percent to $5.58.

A warning from steelmaker Nucor about its earnings added to worries about the fallout from the recession, and the stock slid more than 11 percent to $32.65.

On Monday technology shares had weighed down the market, with the Nasdaq falling about 2 percent. Doubts about the underlying health of the financial sector had resurfaced in the overall market, stalling its attempted recovery from 12-year lows reached earlier this year.

Drags Tuesday included shares of big manufacturers such as Caterpillar Inc , whose customers include natural resources companies like Alcoa. Caterpillar shares were down 2 percent at $25.90.

The S&P materials index dropped about 2 percent. Shares of U.S. Steel Corp dropped 7 percent to $17.12. (Editing by Chizu Nomiyama)

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