Updated from 2:14 p.m. EST

Stocks backed off their morning highs Wednesday afternoon as a bailout plan for the U.S. auto sector made headway in the House of Representatives but saw pointed opposition in the Senate.


Dow Jones Industrial Average

, which had rallied about 188 points earlier in the day, was up 42 points at 8733, and the

S&P 500

was up 7 points at 895. The


was gaining 11.8 points at 1559.

We've had a slight upward trend on some positive news with regard to President-elect Obama's infrastructure plan and progress for the automakers in Washington, says Matthew Smith, chief investment officer of Smith Affiliated Capital -- "but in a bear market that can change in a minute."

"You just don't know what's going to be coming out in terms of Washington or Wall Street," he says, in terms of the current market sentiment.

House Democrats said they finalized an agreement for a roughly $15 billion bailout for the

Big Three automakers



(F) - Get Report


General Motors

(GM) - Get Report




But the plan, under which the government would draw from an existing loan program meant to help the automakers build fuel-efficient vehicles, is facing pushback from skeptical Republicans in the Senate. As the likelihood for a resolution on Wednesday faded, so did market advances.

"The problem is that when a company goes into chapter 11, they have an interim financing need and they come out better, but because of the lack of debt financing the automakers could go from chapter 11 to chapter 7," says Smith.

In economic data, the Commerce Department reported a 1.1% decline in

wholesale inventories in October

, wider than the 0.2% cutback predicted by economists and the biggest inventory decline by wholesalers since November 2001.

According to the Mortgage Bankers Association, its Market Composite Index, a measure of mortgage loan application volume, was 796.8 in the week ended Dec. 5, a decrease of 7.1% on a seasonally adjusted basis from 857.7 one week earlier. The refinance share of mortgage activity is now 73.7% of total applications, up from 69.1% the previous week. Meanwhile, credit watch agency TransUnion reported that average bank

credit card debt

in the third quarter increased nearly 1.6% over the second quarter and 6% from the third quarter of 2007 nationwide.

In company news, insurance behemoth

America International Group

(AIG) - Get Report

owes Wall Street firms as much as $10 billion for speculative trades that went south, according to a report in

The Wall Street Journal

. The trades, which the company argues are "credit protection instruments", were not previously detailed, and thus the losses aren't covered in the government's $150 billion bailout package. It remains to be seen how AIG plans to pay them off. AIG's shares were on the decline Wednesday morning.

Mining company

Rio Tinto


announced a plan to cut 14,000 jobs and reduce spending to $4 billion from $9 billion in 2009 in light of falling prices for commodities. Shares were soaring more than 25% Wednesday.

Electronic Arts

on the other hand was falling some 12% after the video-game maker cut its forecast for fiscal 2009 for the second time in two months late Tuesday. The stock received downgrades at Bank of America and Smith Barney, amongst other

analyst actions


Shifting to commodities, crude oil was rising $2.25 to $44.32 a barrel. Gold was gaining $35.20 to $809.40 an ounce.

The Department of Energy reported that U.S. crude oil inventories increased about 400,000 barrels in the week ended Dec. 5 over the week prior. "At 320.8 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year," the department said.

OPEC is scheduled to meet next week to evaluate the effectiveness of its earlier decision to cut production targets by 1.5 million barrels per day, and to weigh the need for more cuts. Another OPEC production cut could help stabilize oil prices that have fallen with global economic hardships.

"They were promising a big surprise in these cuts and we rallied on it - and now it would have to be amazing," says Phil Flynn, energy analyst and general market analyst at Alaron.

"It remains unclear whether production cuts so far are enough to avoid a counter-seasonal inventory build in the fourth quarter of 2008, a build that would add to downward price pressure over the winter," according to a short-term outlook report this week by the Energy Information Administration. However, "The position of some OPEC members at the upcoming meeting may be influenced by a desire to avoid excessive production cuts that might further tighten the market and trigger a sharp price rebound that could hurt the world economy," wrote the EIA.

Shares of

Exxon Mobil

(XOM) - Get Report



(BP) - Get Report




rose early in the day but fell off highs by midafternoon.

In other economic news, three-month dollar-based London Interbank Offered Rate (LIBOR) broke through its low for the year Wednesday morning, falling 6.5 basis points to 2.09875%. LIBOR, the rate at which banks borrow funds from other banks, is the world's most widely used benchmark for short-term interest rates.

Meanwhile, the rates for three-month Treasury notes fell below zero -- albeit intermittently -- Wednesday morning. Treasury bill rates turn negative when investors are so risk-averse that they're essentially willing to pay the U.S. government to safeguard their money.

Longer-dated U.S. Treasury securities were recently falling in price. The 10-year was falling 8/32 to yield 2.7%, and the 30-year was giving up 1-13/32, yielding 3.1%. The dollar was of late weaker against the euro and pound, and stronger against the yen.

Overseas, European markets were mixed -- the FTSE in London was down 0.3%, while the DAX in Frankfurt traded up 0.5%, respectively. In Asia, Japan's Nikkei and Hong Kong's Hang Seng both ended higher.

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