U.S. Stocks Work Higher in Rebound Move

Updated from 10:54 a.m. EST

Stocks in the U.S. were building on an opening bounce Tuesday, as General Electric (GE Quote) narrowed its earnings forecast and the Big Three automakers returned to Capitol Hill hoping to secure a bailout.

The Dow Jones Industrial Average was gaining 226 points to 8375, and the S&P 500 was better by 27 points to 843. The Nasdaq added 45 points to 1443.

During the previous outing, stocks sold off sharply as traders took profits from a sharp five-day rally in the blue-chip indices. The National Bureau of Economic Research also said that the economy has been in a recession since December 2007. At Monday's close, the Dow had lost 679.95 points, or 7.7% to 8149.09; the S&P 500 fell 80.03 points, or 8.9%, to 816.21; and the Nasdaq sank 137.50, or 9%, to 1398.07.

Paul Nolte, director of investments at Hinsdale Associates, said that today's rebound is not surprising given the broad selloff from the previous session. Trading in the S&P 500 has been tied to a 20% range since October as the economy attempts to determine how much longer the U.S. recession will continue, he said.

"The news is going to be bad for the next three or four months," said Nolte, who foresees unemployment, retail sales and home sales numbers continuing to worsen in the short term. "Welcome to the worst part, probably, of the current downturn."

The market is currently wrangling with a push and pull between deflation and inflation, said Michael Pento, senior market strategist at Delta Global advisors. The Treasury and Federal Reserve continue to pump money into the market, but the move is ultimately inflationary, he said.