updated 12/3/2008 7:57:05 AM ET 2008-12-03T12:57:05

In a session that showed more indecision than conviction, the stock market rebounded Tuesday from the previous day’s massive decline. The Dow Jones industrials rose 270 points after fluctuating sharply, and all the major indexes rose more than 3 percent.

Major Market Indices

Investors wary about the economy drew solace from Ford Motor Co. Chief Executive Alan Mulally, who said the automaker has enough cash to make it through 2009 and might not need government help. Rival General Motors Corp. said late in the day that it needs $12 billion in government loans to continue operating; the news briefly shook the market, but stocks rebounded before the close.

The market was also encouraged after General Electric Co. said it expects to pay a dividend despite projections that fourth-quarter results will near the low end of its previous guidance. That raised some hopes that U.S. companies may fare better during the recession than the market has feared.

Investors got an additional lift after the Federal Reserve said it will extend the life of key programs aimed at loosening the credit markets and restoring stability to the financial sector. That helped make financial stocks, the hardest hit sector since the credit crisis began, among the market’s biggest gainers.

Still, the day’s news wasn’t enough to completely calm investors who are weary after huge swings in the market the past few months — including the nearly 680-point slide in the Dow on Monday. The blue chips were up more than 260 points during the afternoon Tuesday, then dipped to a loss before swinging higher. Analysts said the volatility underscores how bear markets operate, and warned this kind of trading pattern isn’t expected to change anytime soon.

“I don’t know where the bottom to all this is,” said Alexander Paris, economist and market analyst for Chicago-based Barrington Research. “In these kind of markets, all you have to do is get enough confidence to hold your nose and ignore the bad news to send the market higher.”

The market remains uncertain about what might lie ahead, from how long the recession might last to more troubles in the struggling financial sector. Wall Street this week is uneasy about a number of reports due to be released, primarily Friday’s jobs report that is widely considered the most important economic reading of the month.

The Dow rose 270.00, or 3.31 percent, to 8,419.09, making back more than a third of Monday’s plunge, which came on a string of bad economic news including lackluster retail sales during the Thanksgiving weekend.

Broader stock indexes also soared Tuesday. The Standard & Poor’s 500 index rose 32.60, or 3.99 percent, to 848.81, while the Nasdaq composite index gained 51.73, or 3.70 percent, to 1,449.80.

The Russell 2000 index of smaller companies rose 24.75, or 5.93 percent, to 441.82.

The market’s rise picks up from a five-day rally that was snapped on Monday. Last week’s streak for the Dow and the S&P 500 was the longest since July 2007, and the biggest point and percentage gain since 1932.

Advancing issues outpaced decliners by a 3 to 1 basis on the New York Stock Exchange, where consolidated volume came to 5.79 billion shares, about even with Monday.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.70 percent from 2.76 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.05 percent from 0.03 percent late Monday.

These kind of market movements are typical of periods marked by low economic growth, analysts said. Some, however, are concerned that investors may have gotten carried away since the market completed its biggest rally since 1932 last week.

Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research, said there still might be too much optimism in the market, considering the five straight days of advances before Monday’s drop. He believes there was too much excitement on the part of investors that a bottom might have formed, and that sets the market up for disappointments.

“There’s too much talk of valuations, people jumping in on the bullish side after a bounce,” he said. “And that’s not how bottoms form, and that’s not going to take this market continually higher.”

The nation’s automakers remained in focus through most of the session as Ford, General Motors and Chrysler LLC returned to Washington to submit plans for remaking themselves. Lawmakers demanded those plans before considering whether to give the automakers $25 billion in government support.

And, investors remain wary as the automakers released their November sales figures Tuesday. Ford said its sales tumbled 31 percent amid a continued slump in consumer spending and tight credit markets. Toyota’s sales fell 34 percent despite its extension of zero-percent financing on a dozen vehicles. General Motors Corp. reported a 41 percent slide.

Ford shares rose 15 cents, or 5.9 percent, to $2.70. GM rose 26 cents, or 5.7 percent, to $4.85.

Meanwhile, Dow component General Electric rallied after the diversified industrial, finance and media conglomerate unveiled plans to reorganize its ailing GE Capital finance unit. The changes are expected to save GE $2 billion next year, but will likely lead to job cuts.

Shares spiked $2.11, or 14 percent, to $17.61.

Financial firms bounced back despite a report that Goldman Sachs Group Inc. could face losses of about $2 billion in the fiscal fourth quarter. According to a report in The Wall Street Journal citing industry insiders and analysts, the firm could post a loss of about $5 per share, well above the average analyst estimate of a loss of $1.06 per share.

Goldman Sachs dropped 76 cents to $65.00, while Bank of America Corp. rose $1.52, or 11.8 percent, to $14.37. JPMorgan Chase & Co. added $2.41, or 9.2 percent, to $28.53.

The dollar fell against other major currencies. Gold prices rose.

Light, sweet crude fell $2.32 to settle at $46.96 a barrel on the New York Mercantile Exchange.

Overseas, Japan’s Nikkei stock average fell 6.35 percent. In afternoon trading, Britain’s FTSE 100 was up 0.19 percent, Germany’s DAX index was up 0.74 percent, and France’s CAC-40 was down 0.30 percent.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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