Wall Street broke a two-day slide today as investors cherry-picked insurance, technology and home-building stocks on bits of welcome news for those industries.
But jitters about weak first-quarter corporate profit reports and a downbeat assessment of the economy from the Federal Reserve held the market's gains in check.
Concerns over quarterly results and company forecasts for the remainder of the year have rattled the market this week, saddling the Dow Jones industrials with a nearly 3% loss over Monday and Tuesday.
But analysts also said some time-out was necessary after the Dow put up its biggest four-week surge since 1933. Analysts are not ready to call the end of the rally but trading likely will remain volatile as investors look to corporate reports and forecasts for signs of where the economy is headed.
"We're braced for a lousy earnings season because we have not had a lot of guidance," said Frederic Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. "We're in a volatile bottoming process."
The Dow Jones industrials rose 47.55, or 0.6%, to 7,837.11. The Standard & Poor's 500 index rose 9.61, or 1.2%, to 825.16, and the Nasdaq composite index rose 29.05, or 1.9%, to 1,590.66.
Traders jumped on some glimmers of hope that emerged from the home-building and insurance industries.
A $1.3bn (€979.7m) deal between Pulte Homes and rival Centex announced Wednesday will create the nation's largest home-builder. Centex jumped 18.9%, while Pulte fell 10.5%. Other home-builders were mixed.
Insurers jumped following a report in The Wall Street Journal that the government may soon provide rescue funds to the ailing life insurance industry. An announcement could come within the next few days, the Journal said. Life insurers have been hit hard by investment losses this past year.
MetLife rose 2.4%, Prudential Financial Corp. gained 7.7% and Hartford Financial Services Group added 13.5%.
Technology stocks showed some of the biggest advances following an encouraging forecast from Juniper Networks. The maker of equipment for computer networks said its first-quarter earnings should meet forecasts even as sales will likely fall short of expectations. Its shares jumped 12%.
Cisco Systems added 1.7%, while Microsoft gained 2.3%.
Some corporate news weighed on parts of the market. Ryder System tumbled 5.31, or 18%, to 24.25 after the truck leasing and logistics company lowered its first-quarter earnings projection. The company said the weak economy had eroded demand.
An analysts' assessment of Bank of America Corp. corralled most financial stocks. The Oppenheimer & Co. report, which the company disagreed with, predicted Bank of America will have to raise an additional $36.6 billion in capital. The stock lost 30 cents, or 4.1%, to 7.06. It was the steepest slide among the 30 stocks that make up the Dow industrials.
Some investors were hopeful that regulators would soon move to curb short-selling, in which traders try to profit from a stock's decline by selling borrowed shares and buying them back at a lower price.
SEC commissioners voted to open certain proposals to public debate. The group could settle on one short-selling plan among the five put forward and formally approve it sometime after a 60-day comment period.
The day also brought mixed economic news. The Commerce Department said wholesalers trimmed their inventories in February by the steepest amount in more than 17 years. But sales rose for the first time since the summer. The data signalled that companies could be getting their inventories under control.
Federal Reserve policymakers, faced with the danger of a worsening recession, decided at their March meeting to plough $1.2 trillion (€904bn) into the economy to drive down interest rates and entice Americans to start buying again.
Minutes from the gathering revealed growing concerns about a vicious economic cycle in which rising unemployment would curtail consumer spending, potentially into 2010.
Investors had become more upbeat in recent weeks as some economic readings have not been as bad as forecast and as governments across the globe pledged to fight the recession.
Before Monday, the Dow had risen more than 20% from a 12-year low in early March. Stocks fell at the start of the week as investors worried that weaker-than-expected earnings and forecasts could upset the rally.
Late yesterday, aluminium maker Alcoa said it lost nearly half a billion dollars in the first quarter, more than analysts had expected. Many saw the report as a sign of more dismal results to come.
In other trading Wednesday, the Russell 2000 index of smaller companies rose 10.42, or 2.4%, to 442.12.
About three stocks rose for every one that fell on the New York Stock Exchange where volume came to a light 1.32 billion shares.