NEW YORK (Reuters) - Stocks staged a late fight back on Tuesday after a choppy session in which stronger-than-expected results and outlook from computer maker Hewlett-Packard offset fears that more losses at Citigroup (C.N) and other banks are yet to come.
Stocks swung between negative and positive territory. Traders took heart that the market stayed above five-year lows.
HP helped the Dow outperform the other indexes as the computer maker’s results underscored its resilience in the face of the economic crisis. HP jumped almost 15 percent.
“There’s optimism that these lows are holding and so we had a bit of an opportunity rally here,” said Richard Sparks, senior equities analyst at Schaeffer’s Investment Research in Cincinnati, Ohio. “There was no good news I saw today apart from Hewlett Packard.”
Citigroup’s shares fell 6 percent to $8.36, hitting a 13-year low, on concern that its plan to slash 52,000 jobs might not be enough to return the second-largest U.S. bank to health.
The Dow Jones industrial average .DJI rose 151.17 points, or 1.83 percent, to 8,424.75. The Standard & Poor's 500 Index .SPX gained 8.37 points, or 0.98 percent, to 859.12. And the Nasdaq Composite Index .IXIC added just 1.22 points, or 0.08 percent, to 1,483.27.
HP’s stock shot up 14.5 percent to end at $33.59 on the New York Stock Exchange, while another tech bellwether and Dow component, International Business Machines Corp(IBM.N) rose 3.4 percent to $80.08.
Earlier in the session, the Dow had fallen as low as 8,105.44, while the S&P 500 tumbled to an intraday low of 826.84, below its 2008 closing low, and the Nasdaq dropped as low as 1,429.92.
Despite the indexes’ wild swings throughout the day, investors’ fear seemed to have ebbed, at least for the moment. The Chicago Board Options Exchange Volatility Index .VIX, or the VIX, lost 2.18 percent to end at 67.64. The VIX is Wall Street’s favorite fear barometer.
Home Depot Inc (HD.N) gained 3.6 percent to $20.71 after the world’s largest home improvement retailer posted a better-than-expected quarterly profit, but said it expects a steeper drop in full-year sales as the housing sector’s downturn bites harder into its bottom line.
Further fueling worries about the economy, the U.S. Producer Price Index logged a record decline last month as energy prices and chain-store sales fell amid sluggish economic growth.
“Rather than being viewed as a positive, (the data) is being viewed as evidence of the global deflation theme, which has become a new area of anxiety,” said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.
A report from the National Association of Home Builders showed no let-up in the housing sector’s woes, with home builder sentiment falling to a record low in November.
Uncertainty about the fate of billions in government financial aid sought by General Motors Corp (GM.N) and the other beleaguered U.S. automakers added to the nervousness.
Shares of GM cut earlier losses but ended down 2.8 percent at $3.09 while the executives of the “Big Three” automakers were in Washington to ask the U.S. Senate for approval for a bailout. Ford (F.N) was down 2.3 percent at $1.68.
Earlier, U.S. Treasury Secretary Henry Paulson told a House Financial Services Committee hearing that the $700 billion bailout fund should not be used to prevent the failure of automakers.
Among the stocks that kept a lid on the Dow’s advance was jet aircraft maker and defense contractor Boeing Co (BA.N), which was the biggest drag on the Dow amid concerns over whether the company will be able to meet profit estimates over the next two years. Boeing fell 3.9 percent to $39.56.
On the Nasdaq, Yahoo YHOO.O rose 8.7 percent to $11.55 after the departure of CEO Jerry Yang renewed hopes that it would clear the way for a deal with Microsoft Corp (MSFT.O).
Trading volume was moderate on the New York Stock Exchange, with about 1.60 billion shares changing hands, well below last year’s estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.43 billion shares traded, above last year’s daily average of 2.17 billion.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 5 to 3, while on the Nasdaq, about eight stocks fell for every five that rose.
Editing by Jan Paschal