Wall Street Ends on a High Note; Dow Gains 270 Points

Updated from 3:08 p.m. EST

Stocks in the U.S. finished on the upside 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 major indices carried gains the entire session, and the Dow Jones Industrial Average ended the day up 270 points, or 3.3%, at 8419.09. The S&P 500 gained 32.60 points, or 4%, to 848.81, and the Nasdaq added 51.73 points, or 3.7%, to 1449.80.

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 7.7% of its value, while the S&P 500 and Nasdaq each tumbled about 9%.

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.