Updated from 3:02 p.m. EDT
Stocks in New York pulled back from large early gains as the effects of a government housing-relief bill and encouraging employment data was counteracted by a rebound in crude-oil prices on fresh inventory data. But in the final hour stocks staged a comeback.
Dow Jones Industrial Average
was up 148 points at 11,546, and the
climbed 17 points at 1280. The
, which had dipped into negative territory, was up 2 points at 2321.
Wednesday morning, President Bush signed into law a housing bill that would help struggling homeowners and offer support for troubled mortgage companies
. Bush had previously threatened to veto the bill because of provisions he said would help lenders that contributed to the current housing crisis.
"The actual impact of
the housing bill is really diminished because everybody expected that," said Bruce Bittles, chief investment strategist at Baird. He said the market benefited early from momentum generated during Monday's large run-up.
"I personally don't believe that this housing bill will offer that much relief," said Chip Hanlon, securities analyst at Delta Global Advisors. He said the housing market will go through a correction but that the correction has been priced in to the stock market.
Hanlon said he believes the market is reaching a moment of extreme pessimism that comes before a buying opportunity. "I think we're getting that baby out with the bathwater point. If it takes one more swoosh, so be it."
Citing ongoing fragility in the financial system, the
also said it would leave its discount window, as well as its term securities lending facility, open to investment banks until Jan. 30, 2009. The primary dealer credit facility was originally slated to close in September.
Earnings season, meanwhile, remains in full swing. After the close Tuesday, video-game maker
. Shares fell 7.2%.
Similarly, life insurance provider
reported earnings that fell year over year and failed to meet analysts' expectations, sending the stock down 4%.
Before the new day's trading got underway, cable operator
announced a 7.5% increase in profit from the year-ago quarter, although growth in its subscription base was slowing. Glass producer
for the third quarter. Comcast gained 3.8% to $19.90, while Corning fell 5.2% to $20.21.
reported rising profits stemming from elevated oil prices. It climbed 11%.
reported that second-quarter profit more than doubled as demand allowed it to pass rising raw materials costs on to clients. Shares surged 7.3%.
reported declining profit but affirmed its full-year outlook. Navigation-device maker
, on the other hand,
. Moody's lost 3.3%, and Garmin plummeted 22%.
Securities and Exchange Commission
extended until Aug. 12 its ban on naked short-selling of Fannie Mae, Freddie Mac and brokerages.
Shifting over to commodities, crude oil added $4.58 to settle at $126.77. Gasoline prices continued their decline, as the average reached $3.926 a gallon, down from $3.941 Tuesday and $4.086 a month ago. August gold futures were lost $13.60 to $902.90 an ounce.
"Oil's pullback in recent days has provided the relief for this rally," said Hanlon of Delta Global Advisors. He said today's bounce is providing drag for equities. He said that oil is probably trying to find a range in the $120 area, and was skeptical that it could bounce back to the $140s.
Bittles of Baird said that the economy is having trouble gaining traction because of pressure on the consumer, rising commodity prices and unemployment. He said that before the economy can do well, oil prices have to come down.
In economic data, the Energy Information Administration said that gasoline inventories for the week ended July 25 fell by 3.5 million barrels last week, whereas analysts were looking for an increase in supply of 400,000 barrels. Oil inventories fell by 100,000 barrels to 295.2 million barrels, a smaller decline than the 1.3 million barrels expected by economists.
Meanwhile, Automatic Data Processing's July payroll report showed an increase of 9,000 jobs, above the consensus estimate for a loss of 60,000, and an improvement over a loss of 79,000 in June.
"I think it'll be too optimistic," said Bittles of the payroll report. "I have to believe the economy is losing jobs. I don't think that we're shedding jobs at a rapid pace, but I do think we're losing jobs."
Separately, the Mortgage Bankers Association showed mortgage application volume for the week ended July 25 declining 14.1% to its lowest level this year.
Treasury prices were bouncing back from early losses. The 10-year note was even in price, yielding 4.04%, and the 30-year was shedding 4/32 to yield 4.63%. The dollar was slipping against the euro, the yen and the pound.
Most global exchanges, including London's FTSE, Frankfurt's DAX, Tokyo's Nikkei and Hong Kong's Hang Seng, were gaining ground.
For a quick take on more of today's earnings, please click here.
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