NEW YORK, Nov. 20 (UPI) -- U.S. stock indexes closed up after stumbling during the day before and shortly after the U.S. Federal Reserve lowered its U.S. economic forecast for 2008.

The Dow Jones industrial average was up 51.70 points, or 0.4 percent, to close at 13,010.14. The broader Standard & Poor's 500 Index added 6.43 points, or 0.45 percent, at 1,439.70.

On the New York Stock Exchange, 1,984 stocks advanced and 1,031 declined, on volume of 4.9 billion shares traded.

The technology-heavy Nasdaq Composite Index advanced 3.43 points, or 0.13 percent, at 2,596.81.

The market started the day learning technology giant Hewlett-Packard Co. (NYSE:HPQ) reported a stronger-than-forecast 28 percent profit increase and said current-quarter earnings would be ahead of Wall Street estimates.

It then learned government-backed mortgage buyer Freddie Mac (NYSE:FRE) reported a $2 billion quarterly loss and said it was "seriously considering" a reduction in its fourth-quarter dividend.

The Fed lowered its 2008 forecast, saying growth could slow to 1.8 percent, "notably below" its June 2.5 percent to 2.75 percent anticipation.

In London, the FTSE 100 index closed up 102 points, or 1.67 percent, at 6,222.80.

Japan's Nikkei 225 stock index finished up 168.96 points, or 1.12 percent, at 15,211.52.

The benchmark 10-year U.S. Treasury note added 7/32, yielding 4.05 percent, while the 30-year bond finished unchanged, yielding 4.48 percent.

The U.S. dollar rose to 109.89 yen from 109.81 yen in New York late Monday. The euro closed up to $1.4812 from $1.4666 after reaching a record high of $1.4819.

Freddie Mac posts $2B loss

MCLEAN, Va., Nov. 20 (UPI) -- Freddie Mac, the No. 2 U.S. buyer and guarantor of home loans, posted a record $2 billion loss Tuesday and said it needs to raise fresh capital to stay afloat.

The government-sponsored enterprise also said it was "seriously considering" a 50 percent cut in its fourth-quarter dividend -- the first cut since becoming a public company in 1989.

The company said it expected its fourth-quarter results to mimic the current quarter, which would further erode its capital.

The third-quarter loss was mostly because the mortgage finance company, formally known as the Federal Home Loan Mortgage Corp. (OTCPK:FREJO), needed to set aside $1.2 billion to account for bad home loans, it said.

Chief Financial Officer Buddy Piszel told The Wall Street Journal the company would likely sell several billion dollars of preferred stock in the "very near term."

Freddie Mac shares plummeted 28.69 percent, or $10.76, to close at $26.74 on the New York Stock Exchange. Shares of bigger sister rival Fannie Mae (NYSE:FNM), which reported a $1.4 billion loss 11 days earlier, dropped 24.84 percent, or $9.33, to close at $28.25 on the NYSE.

Fed: U.S. economic growth to slow

WASHINGTON, Nov. 20 (UPI) -- U.S. economic growth will slow and unemployment will rise due to the U.S. housing slump and credit crunch, the U.S. Federal Reserve projected Tuesday.

But inflation will remain moderate, the Fed board said its first quarterly report on U.S. economic activity accompanying the minutes of its Oct. 30-31 Federal Open Market Committee meeting.

Central bank policymakers predicted growth could slow to 1.8 percent in 2008, the report said. The projection figures are "notably below" the committee's June 2.5 percent to 2.75 percent anticipation, the Fed said.

"Most participants viewed the risks to their (gross domestic product) projections as weighted to the downside," it added.

Unemployment will rise to 4.8 percent or 4.9 percent by the end of 2008, slightly above the 4.75 percent rate the Fed forecast in June.

Core inflation will be 1.7 percent to 1.9 percent, down from 1.75 percent to 2 percent, the Fed said.

"Output will grow at a pace somewhat below its (current) trend rate and the unemployment rate will edge higher, owing primarily to weakness in housing markets and to the tightening in the availability of credit resulting from recent strains in financial markets," the report said.

Midwest, Virgin ranked as best airlines

NEW YORK, Nov. 20 (UPI) -- Midwest Airlines and Virgin America ranked highest in overall quality among U.S. economy airlines, a Zagat Survey of frequent fliers revealed Tuesday.

JetBlue Airways (NASDAQ:JBLU), Frontier Airlines and Hawaiian Airlines rounded out the top five, the survey showed.

Singapore Airlines and Emirates Airline ranked highest internationally, followed by Thai Airways, All Nippon Airways and Air New Zealand (OTCPK:ANZFF), Zagat said.

Of U.S. airlines, Southwest Airlines (NYSE:UV) had the best frequent-flier program and Web site.

Tampa, Denver and Minneapolis-St. Paul ranked as the top three domestic airports. The worst: New York's LaGuardia.

Domestic delays and cancellations topped respondents' list of irritants with 35 percent of the vote. Cramped seats and crowded planes ran a close second at 34 percent, while poor service rated 15 percent, followed by security delays (5 percent) and lack flight status information (5 percent).

Still, 44 percent of fliers said they traveled as much as they did two years ago.

Among the "outtakes" Zagat surveyors heard from frequent fliers: "I'd rather be a package on FedEx;" "Their planes make Larry King look young;" "If they could have pay toilets, they would;" and "Only good thing about first class these days is that you get to leave the plane first."