Updated from 4:14 p.m. EST

Stocks in the U.S. got off to a rough start Wednesday following a series of gloomy economic reports, but they rallied to close with solid gains ahead of the Thanksgiving holiday.

The Dow Jones Industrial Average, down some 168 points earlier, finished up 247.14 points, or 2.9%, at 8726.14, and the S&P 500 added 30.29 points, or 3.5%, at 887.68. The Nasdaq led the move higher with a gain of 67.37 points, or 4.6%, at 1532.10. The day's gains marked the fourth straight winning session for the Dow and the S&P 500.

"In the period pre-Thanksgiving and after Thanksgiving, the market generally acts pretty well," said Bruce Zaro, chief technical strategist at Delta Global Advisors. He said that the market rallied about 20% from its Oct. 10 low into election day, and he sees the recent upward movement in stocks as a second iteration of that event.

New York's market will be closed Thursday and open for a half day Friday.

"The net result will probably be a sideways pattern until we get some concrete evidence that there is some life in the economy," said Zaro. He said there's additional bad news on what is shaping up to be an ugly Christmas season. "The fourth quarter is going to fall off a cliff, and those numbers start coming out in January." He said he foresees a February rally, as the market begins to look past the economic downturn.

The day's rally came in the face of economic-data releases that illustrated the severity of the economy's troubles.

The Census Bureau reported that durable-goods orders declined 6.2% in October, a bigger drop than the 2.5% expected by economists. The September figure was revised down to a 0.2% decline from a 0.8% increase.

Also, the Chicago purchasing managers' index of manufacturing activity came in at 33.8, well below the consensus estimate of 38.5 and down sharply from October's read of 37.8.

October new-home sales data from the Commerce Department showed a bigger-than-expected decline to an annual rate of 433,000 homes, the slowest rate of sales since January 1991.

Separately, Commerce said personal income showed a 0.3% uptick last month. Analysts had forecast income growth of 0.1%. Spending slowed by 1%, its broadest decline since September 2001.

A consumer-sentiment survey from the University of Michigan yielded a read of 55.3, another sharp decline from the previous month.

In one positive development, weekly initial jobless claims data from the Census Bureau showed claims were down 14,000 to 529,000 for the week ended Nov. 22. The previous claims figures were revised up by 1,000 to 543,000.

"I think most of these bad numbers are baked in," said Larry Adam, chief investment strategist at Deutsche Bank. He said that although many of the data releases were weaker than analysts had expected, they are consistent with what the market has seen since October. "When the numbers get a little bit less bad ... I think that'll actually help the market."

Outside of domestic indicators, China's central bank announced it cut its benchmark interest rate by 1.08%, a move that reflects increasing concern that one of the world's fastest-growing economies has slowed considerably.

Troubles weren't confined to Asia. The European Commissioncalled for a $256 billion economic stimulus plan to help the continent alleviate its own recessionary woes.

The major averages had earlier been trading with losses following the release of numerous economic reports, many of which accentuated investor pessimism about the future of U.S. companies, but optimism appeared to pick up following a press conference by President-elect Barack Obama.

As data releases painted a picture of the downturn, Obama staged a press conference to name former Federal Reserve chairman Paul Volcker to head a White House advisory board geared at steering the U.S. through the current financial turmoil.

"You've had a leadership vacuum taking place, and I think he's basically appointed high-visibility people who have pretty good track records," said Adam. He said the market had been facing some uncertainty about who would head the new economic team. "Will it be Tim Geithner? Will it be Lawrence Summers? Or will it be Volcker? Well, now you've got all three, all probably working in a coordinated fashion."

The Federal Deposit Insurance Corp. also announced it would create a process by which qualified, nonbank firms can bid for deposits and assets of failing banks. The plan is designed to reduce costs to the FDIC as banks fail as well as to minimize jolts to the financial system, the agency said.

As for the day's corporate earnings, farm-equipment maker Deere ( DE) announced an 18% decline in fourth-quarter profit. Shares added 8% to $35.76.

Jeweler Tiffany ( TIF), meanwhile, announced a 57% decline in earnings on flagging U.S. sales. Shares finished up 0.4% at $20.91.

In other company news, Fitch cut its debt rating on Toyota ( TM), putting a negative outlook on the company. Both domestic and foreign automakers have had a rough go of it thanks to weak demand. The stock fell 0.9% to $65.14.

U.S. automakers got a substantial bump on speculation that Congress would reconsider doling out government funds to help the industry. General Motors ( GM) rocketed 35% to $4.81, and Ford ( F) surged 30% to $2.15.

Canadian telecom company BCE ( BCE), announced that its leveraged buyout may not take place by its scheduled date of Dec. 11. Shares plummeted 34% to $20.63.

Among financial firms, Goldman Sachs ( GS) ended discussions with Panasonic ( PC) about a potential sale of Goldman's stake in Sanyo. Goldman cited concerns about the price and deal structure as it walked away. Goldman gained 6.6% to $76.50, and Panasonic edged down 0.1% to $14.65.

Insider Insights

Staying with the financials, Bloomberg reported that Oppenheimer analyst Meredith Whitney cut her earnings estimates for financial firms including Citigroup ( C), JPMorgan Chase ( JPM) and Bank of America ( BAC) as she predicted additional writedowns of bad loans in the coming year.

Shares of Citi nonetheless jumped 16% to $7.05. JPMorgan ticked up 2.9% to $30.62, and BofA added 4.3% to $15.43.

In the commodities space, crude oil gained $3.67 to close at $54.44 a barrel. Gold dropped $10 to $808.50 an ounce.

Longer-dated U.S. Treasury securities were rising in price. The 10-year was adding 1-4/32 to yield 2.98%, and the 30-year was up 1-30/32, yielding 3.52%. The dollar was higher vs. the euro, yen and pound.

Globally speaking, European exchanges were mixed, as the FTSE in London took losses but the DAX in Frankfurt was flat. In Asia, Japan's Nikkei closed with losses, and Hong Kong's Hang Seng ended with gains.