Updated from 4:19 p.m. EST

Wall Street explored both positive and negative territory in another chaotic round of trading Wednesday, but when the close finally came, the major averages were sitting at their session highs.

The Dow Jones Industrial Average climbed 146.24 points, or 1.16%, to 12,735.31, and the S&P 500 rose 18.94 points, or 1.36%, to 1409.13. The Nasdaq Composite advanced 34.04 points, or 1.39%, at 2474.55, its first winning session of 2008.

On the Dow, a 4.8% rise in DuPont ( DD) and a gain of 2.9% in shares of Hewlett-Packard ( HPQ) offset a 2.2% decline in General Motors ( GM).

Among tech names, Google ( GOOG), Apple ( AAPL), Cisco ( CSCO), Qualcomm ( QCOM) and Nvidia ( NVDA) jumped 3.2% or more.

Volatility has been the norm in the market for some time, with the major averages fluctuating almost daily between red and green, sometimes multiple times, and it was the story once again.

On the New York Stock Exchange 5.23 billion shares changed hands, as advancers topped decliners by a 6-to-5 margin. Volume on the Nasdaq reached 2.79 billion shares, with losers edging winners 8 to 7.

Initial buying interest that followed Monday's selloff gradually gave way to more gloomy news, this time partly courtesy of Goldman Sachs, who forecast that the domestic economy will slip into a recession this year. The firm believes gross domestic product will shrink by 1% annualized in the second and third quarters, and it predicted that the Federal Reserve will gradually cut rates to 2.5% in order to get growth back on track.

For the entire year, GDP should increase by 0.8%, Goldman predicted.

"The pattern over the last few days is a higher open and by the afternoon we're in a downtrend," said Hank Smith, chief investment officer with Haverford Investments. "The stock market is now catching up with the bond market in saying the Fed needs to cut. It is clear to the equity market that the risks of a recession are greatly enhanced or we're already in one."

Robert Pavlik, chief investment officer with Oaktree Asset Management, said that bargain-hunters jumped in after the market reached a 10% correction level again.

"Lowered expectations are already priced into stocks, and the markets will look past the bad news and forward toward better conditions later on this year," said Pavlik. "Another boost to stock prices could potentially come if the Federal Reserve's FOMC policy committee steps up and cuts the fed funds rate by a larger-than-expected 50 basis points on January 30."

Last time out, rumors that Countrywide Financial ( CFC) would declare bankruptcy and pessimistic comments from AT&T's ( T) CEO coupled to knock down the major averages, with the bulk of the selloff coming in the final hour.

Countrywide, which fell 28% in the prior session even after denying the bankruptcy rumors, continued to weigh on financials. Shares were down another 6.4% after the lender reported that foreclosures in December more than doubled from a year earlier.

Bond insurer MBIA ( MBI) also traded lower after the company said it will take a $3.3 billion writedown in the fourth quarter. MBIA also slashed its dividend to 13 cents a share from 34 cents in order to save $80 million a year and maintain its AAA rating. Shares slid 58 cents, or 4.2%, to $13.40.

Still, financial-related subsector indices staged a late-session rally to finish higher. The Amex Securities Broker/Dealer Index rose 1.4%, the NYSE Financial Sector Index was 1.3%, and the Nasdaq Financial Index added 0.9%.

Among the best individual performers, E*Trade Financial ( ETFC) rebounded from the previous day's decline to add 6.7%, and Bear Stearns ( BSC) finished 5.1% higher.

Several other sector measures also closed the day with gains. The Philadelphia Semiconductor Sector Index added 0.3% and the Philadelphia Housing Sector Index rose 0.2%. Both had started the day deep in the red.

Also on the bright side, DuPont hiked its 2007 and 2008 profit forecast, citing better-than-expected fourth-quarter sales. DuPont was higher by $2.03 at $44.78.

Fellow Dow member Alcoa ( AA) marked the unofficial start of the earnings reporting season shortly after the closing bell, beating both earnings and revenue targets set by Thomson First Call. The stock finished with a 0.8% gain at $31.25 and was up more than 4% in the after-hours session.

Traders were keeping a close eye on oil prices following the Energy Department's weekly inventory report. The release showed a greater-than-expected decline of 6.8 million barrels in crude inventories last week. Gasoline stocks rose by 5.3 million barrels, and distillate inventories were up 1.5 million barrels. Oil was off 66 cents to close at $95.67 a barrel despite the bullish report.

Gold hovered near all-time records, up $1.40 to close at $881.70 an ounce. Much like the previous session, gold-related stocks including Gold Fields ( GFI) and Yamana Gold ( AUY) finished higher.

U.S. Treasury prices also endured a choppy session. Recently, the 10-year note was down 12/32 in price, yielding 3.83%. The 30-year bond fell 18/32 in price, yielding 4.34%. The dollar, meanwhile, was strengthening against the euro.

Markets abroad were mixed. Overnight in Asia, Japan's Nikkei 225 tacked on 0.5%, and Hong Kong's Hang Seng was higher by 1.9%. In Europe, London's FTSE 100 was off 1.3%, and Germany's Xetra Dax was losing 0.9%.

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