Stocks ended trading slightly higher Wednesday as investors cherry-picked insurance, technology and homebuilding stocks on bits of good news for those industries.
The gains were held in check, though, by worries over weak first-quarter earnings reports.
Concerns over upcoming quarterly results and company forecasts for the remainder of the year have rattled the market this week, saddling the Dow Jones industrials with a nearly 3 percent loss over the past two days.
The losses on Monday and Tuesday followed four straight weeks of massive gains that gave the Dow its best performance since 1933. While few analysts are ready to call the end of the rally, trading is likely to remain volatile as investors look to earnings reports for signs of where the economy is headed.
Preliminary closing calculations showed the Dow Jones industrials rose 47.55, or 0.61 percent, to 7,837.11. The Standard & Poor’s 500 index rose 9.61, or 1.18 percent, to 825.16, and the Nasdaq composite index rose 29.05, or 1.86 percent, to 1,590.66.
“I think the market is going to be very tentative throughout this earnings season,” said Randy Frederick, director of trading at Charles Schwab. “There is going to be sporadic bright spots here and there.”
Some glimmers of hope came from the homebuilding and insurance industries.
A $1.3 billion deal between Pulte Homes Inc. and rival Centex Corp. announced Wednesday will create the nation’s largest homebuilder. Centex shares rallied nearly 20 percent, while Pulte fell 10 percent. Other homebuilders were mixed.
Insurers jumped following a report that the government may soon provide rescue funds to the ailing life insurance industry, according to The Wall Street Journal. An announcement could come within the next few days, the Journal said. Life insurers have been hit hard by investment losses this past year.
Prudential Financial Corp. gained more than 4 percent; and Hartford Financial Services Group Inc. added 12 percent.
The technology sector got a boost from an encouraging outlook from Juniper Networks Inc. The network service provider said its first-quarter earnings should meet forecasts even as sales will likely fall short of expectations. Its shares jumped 12 percent, adding $1.97 to $17.59.
Cisco Systems Inc. added 1.4 percent, while Microsoft Corp. gained 2.5 percent.
Some traders were hopeful that regulators would soon move to curb short-selling, in which traders try to profit from a stock’s decline by selling borrowed shares.
SEC commissioners voted 5-0 to open certain proposals to public debate. The group could settle on one short-selling plan among the five put forward and formally approve it sometime after a 60-day comment period.
The day also brought some disheartening economic news. The Commerce Department said wholesalers cut their inventories in February by the largest amount in more than 17 years as companies struggled to reduce stockpiles amid waning sales.
Federal Reserve policymakers, faced with the danger of a worsening recession, decided at their March meeting to plow $1.2 trillion into the economy to drive down interest rates and entice Americans to start buying again. Minutes from the meeting revealed Wednesday that the economy had deteriorated more than the central bank expected from its previous meeting in January.
Investors had become more upbeat in recent weeks on increasingly better economic data and efforts by governments across the globe to end the recession. Before Monday, the Dow had risen more than 20 percent from a 12-year low in early March. But the index has lost 228 points this week as investors log profits, fearing that worse-than-expected earnings reports could upset the rally.
Late Tuesday, aluminum maker Alcoa Inc. said it lost nearly half a billion dollars in the first quarter, more than analysts had expected. Many saw the report as a sign of more dismal results to come.
Market participants said the recent dip in stocks has created an attractive entry point for investors who don’t want to miss out on what could be a continued upswing.
“We’re still in the midst of that rally,” said Dave Rovelli, managing director of trading at brokerage Canaccord Adams. “These guys that run mutual funds, they can’t miss the rally. If the S&P starts to go positive and they are behind, they are going to have to start buying just to keep up with the return. That’s why this rally might have legs.”
Bond prices rose Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.85 percent from 2.90 percent late Tuesday.
The dollar was mixed against other major currencies. Gold prices rose.
Light, sweet crude rose 15 cents to $49.30 a barrel on the New York Mercantile Exchange.
Overseas, Japan’s Nikkei stock average fell 2.7 percent. Britain’s FTSE 100 rose 0.2 percent, Germany’s DAX index rose 1.2 percent and France’s CAC-40 rose 0.4 percent.