Big Bounce for Wall Street

Boosting financials was Goldman Sachs (GS Quote), which jumped 8.5% after CEO Lloyd Blankfein said the investment bank will not suffer writedowns from subprime mortgage exposure as many of its rivals have. The stock jumped $18.33 to end the day at $233.04, and the comments helped lift others in the sector.

Elsewhere, the Philadelphia Housing Sector Index ended 4.4% higher following positive data on the housing market. A late-afternoon report from the National Association of Realtors showed that pending home sales unexpectedly rose 0.2% in September, compared to expectations for a 2% drop.

Ian Shepherdson, chief economist with High Frequency Economics, said the September pending home sales data were a welcome pause following the hefty declines in August and July, but he warned against getting overly optimistic about housing.

"This does not change the trend, which is still sharply downwards," said Shepherdson. "Looking a bit further ahead, though, we expect the decline in sales to continue, because the inventory overhang continues to depress prices and people are reluctant to borrow to buy depreciating assets."

On the New York Stock Exchange, 3.95 billion shares changed hands, as advancers toppled decliners by a 9-to-2 margin. Volume on the Nasdaq reached 2.60 billion shares, with winners beating losers 7 to 3.

Last time out, the major averages fluctuated between positive and negative territory before weakening in the final hour of trading. At the close, the Dow had a loss of 55.44 points, or 0.43%, to 12,987.30, the first time the index has closed below the 13,000 level since mid-August.