Stocks Vaulted Higher by Afternoon Rally

Beyond technology shares, Heinz (HNZ Quote) reported rising profits, benefiting from strong sales of its frozen foods as struggling consumers stayed at home to prepare their meals. The stock climbed 4.1% to $39.57.

Despite optimistic early action, broader economic gloom continued to hang overhead, as Goldman Sachs reduced its growth forecast for the U.S. economy. According to a research note released by the bank and reported by Bloomberg, GDP is falling at an annual rate of 5% in the fourth quarter and will decline in the first and second quarters of 2009. Unemployment will hit 9% by the fourth quarter next year, the note predicted.

President Bush signed into law Friday a bill to extend issuance of unemployment-benefit checks until the end of the year after an unexpected rise in unemployment for the week ended Nov. 15.

Van Dijk of Zacks said the consumer, facing a declining stock market, the risk of unemployment and an inability to take on additional debt, is in for additional troubles. That, coupled with impending declines in the commercial real estate market and weakening global demand for U.S. goods, spells serious danger for the economy. "Everybody has to set their expectations a lot lower," he said.

Elsewhere, JPMorgan Chase (JPM Quote) is cutting 10% of its investment-banking jobs, according to a report by the Associated Press. The stock slipped 2.8% to $22.72.

JPMorgan wasn't alone on the layoff front. Bank of New York Mellon (BK Quote) said it would lay off 1,800 employees starting in January. Shares gained 6.1% to $25.84.