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Updated from 11:48 a.m. EDT

Stocks in the U.S. continued to fluctuate but were building on modest gains Wednesday after

Lehman Brothers

( LEH) outlined plans to bolster its capital levels as it deals with increasing losses related to the credit crisis.


Dow Jones Industrial Average

was gaining 61 points at 11,291, and the

S&P 500

added 6 points to 1231. The


climbed 18 points to 2228.

Taking center stage early Wednesday,

Lehman announced a plan

to sell a majority stake in its investment-management division and likely report a third-quarter loss of $3.9 billion. Lehman also said it plans to spin off its commercial real-estate assets into a new company and slash its annual dividend to 5 cents a share from 68 cents.

Separately, Korea Development Bank, which had been considering buying a stake in the New York firm, ended talks to purchase an interest. Shares of Lehman, which lost some 45% in Tuesday's session, were trading up 7% in early trading Wednesday.

Elsewhere, Standard & Poor's said it would remove

TheStreet Recommends

Fannie Mae

( FNM) and

Freddie Mac

( FRE) from the S&P 500 index after the close of trading. The government over the weekend announced plans to seize the two mortgage giants, whose exposure to the credit and housing crises threatened the U.S. financial system.

Further indicating worries, Keefe Bruyette launched a salvo of ratings downgrades at nine banks, including


(BBT) - Get BB&T Corporation Report


Bank of America

(BAC) - Get Bank of America Corp Report


Fifth Third

(FITB) - Get Fifth Third Bancorp Report


Kansas Bankers Surety

, a subsidiary of

Berkshire Hathaway

( BRKA), also stopped insuring bank deposits that exceed levels guaranteed by the government.

Outside the financials, shipping firm


(FDX) - Get FedEx Corporation Report

said its fiscal first-quarter profit would exceed estimates while reaffirming its yearly earnings guidance.

The Wall Street Journal

also reported that the Pentagon canceled its air-tanker competition. The Pentagon said it couldn't decide to award a contract to


(BA) - Get Boeing Company Report


Northrop Grumman

(NOC) - Get Northrop Grumman Corporation Report


European Aeronautic Defense Systems

, the



Meanwhile, chipmaker

Texas Instruments

(TXN) - Get Texas Instruments Incorporated Report

raised the low end of its earnings guidance for the third quarter. Meanwhile,

Research In Motion

( RIMM) unveiled its

BlackBerry Pearl Flip 8220

, a flip or "clamshell" version of its popular Blackberry Pearl smartphone to be released in the fall.

In the biotech space,



announced it

received a buyout bid

that trumped a $60-per-share bid from

Bristol-Myers Squibb

(BMY) - Get Bristol-Myers Squibb Company Report

. ImClone did not name the buyer.

Switching to commodities, crude oil was down 36 cents to $102.90 a barrel. OPEC announced it was reducing oil production by 520,000 barrels a day in response to what it said was an over-supplied market.

The Energy Information Administration reported that crude oil inventories for the week ended Sept. 6 declined by 5.9 million barrels, a greater decline than expected by analysts. Gasoline inventories fell by 6.5 million barrels.

Longer-dated U.S. Treasury notes were falling in price. The 10-year was down 12/32 to yield 3.61%, and the 30-year lost 14/32, yielding 4.2%. The dollar was gathering strength vs. the euro, yen and pound. Gold was losing $15 to $777.

Foreign markets such as the FTSE in London, and the Dax in Frankfurt were trading lower. The Nikkei in Japan and the Hang Seng in Hong Kong ended the trading day in Asia lower.