Bulls Make Late Move to Send Wall Street Higher

Pado said he foresees choppy action in stocks until the end of 2008, then an abatement of selling pressure and a January rebound. "Things don't turn around on a dime," he said.

In a slightly positive development for the housing market, the Mortgage Bankers Association said that mortgage applications rose substantially in the last week, following a decision by the Fed to purchase as much as $500 billion in mortgage-backed securities tied to Fannie Mae (FNM Quote), Freddie Mac (FRE Quote) and Ginnie Mae.

"Today's data suggest there is potential for relief in the housing crisis, and the relief could grow if the Federal Reserve expands its recent initiative to purchase agency and mortgage-backed securities," wrote Tony Crescenzi, chief bond market strategist at Miller Tabak, on his RealMoney.com blog. He said an additional stimulus plan from the incoming Obama administration could offer additional incentives for people to buy new homes.

Numerous companies on Wednesday announced changes in their business models and financial policies as the economic environment shifted. Among financial firms, The Wall Street Journal reported that Goldman Sachs (GS Quote) was thinking about starting an Internet banking business.

Separately, Bank of America (BAC Quote) may reduce its headcount by 30,000 as it merges with Merrill Lynch (MER Quote), according to a report by CNBC. Bank of America jumped 7.1% to $15.05, and Merrill gained 7.5% to $12.43.

Another report, this time from Bloomberg, indicated that Merrill would cut its year-end bonuses in half.

Elsewhere, mining company Freeport-McMoRan (FCX Quote) said it was suspending its dividend on declines in copper and molybdenum prices. Shares fell 17% to $18.05.