The S&P 500 and Nasdaq edged lower on Wednesday, after bleak housing data overwhelmed President Barack Obama's $275 billion plan to prop up the housing market.

* The Dow eked out a slight gain, narrowly avoiding a new bear-market low.

* Adding to the somber mood, the Federal Reserve slashed its economic forecast for 2009, and several companies, including Deere & Co ,posted dismal results.

* The Dow Jones industrial average <.DJI> was up 2.79 points, or 0.04 percent, to 7,555.39. The Standard & Poor's 500 Index <.SPX> was down 0.80 points, or 0.10 percent, to 788.37. The Nasdaq Composite Index <.IXIC> was down 2.69 points, or 0.18 percent, to 1,467.97.

(Reporting by Chuck Mikolajczak; Editing by Leslie Adler)