Wall Street pulls off final-hour rebound

NEW YORK – Wall Street rebounded Tuesday in another turbulent session, as investors rushed back into the market after the Standard & Poor's 500 index tested a 2003 low.

The market, which had been down four of the past five sessions, has been volatile amid worries about how long a recession might be. That's driven many retail investors to the sidelines, while big institutional traders like hedge funds keep major stock indexes vacillating.

That was the case on Tuesday as stocks rallied in the final hour of trading. At least some of the buying was because fund managers whose portfolios are tied to the S&P 500 had to find a replacement for Anheuser-Busch Cos. The brewer was officially removed from trading at the market's close after its takeover by Belgium's InBev SA was completed.

Investors also used the market's big drop earlier in the session as chance to scoop up undervalued stocks. There was some encouragement about corporate earnings after Hewlett-Packard Co. said fourth quarter and 2009 results will sail past Wall Street expectations.

But still underpinning the market were concerns that the economy has fallen into a recession that could be the worst downturn in more than two decades. A disappointing reading on wholesale prices and the housing market only confirmed this.

The Labor Department reported that wholesale prices plunged a record amount in October, a drop that could indicate a rising threat of deflation. Meanwhile, homebuilders' confidence in a near-term housing recovery sank to a new all-time low this month, according to the National Association of Home Builders/Wells Fargo housing market index. NAHB Chairman Sandy Dunn said the report "shows that we are in a crisis situation."

Analysts said the market continues to search for a much-elusive bottom, and could yet again retest lows. The major indexes continued to attempt some sort of recovery from October's devastating losses.

"We're going to need more strength from here for a period of time to develop a convincing story that the market has bottomed," said Alan Gayle, senior investment strategist at RidgeWorth Investments.

The Dow ended up 151.17, or 1.83 percent, to 8,424.75.

The Standard & Poor's 500 index rose 8.37, or 0.98 percent, to 859.12, after earlier in the drifting toward its 2003 low of 818.69. The Nasdaq composite index added 8.37, or 0.98 percent, to 1,483.27. The Russell 2000 index of smaller companies fell 3.79, or 0.84 percent, to 447.51.

There also remains uncertainty in the financial system as Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke were grilled on Capital Hill about their management of a $700 billion financial bailout. Paulson told the House Financial Services Committee that the U.S. has "turned a corner" in averting a financial collapse, but more work needs to be done.

Paulson also said during his testimony that the administration remains firmly opposed to dipping into the government's financial bailout fund for a $25 billion rescue package for Detroit's Big Three automakers, no matter how badly they need the help.

"There are other ways" to help them, Paulson said.

Executives of General Motors Corp., Ford Motor Co. and Chrysler LLC and the head of the United Auto Workers union testified at a Senate Banking Committee hearing about a potential bailout. The automakers, seeking $25 billion in government aid, have the backing of Democratic congressional leaders, but the Bush administration and Republican lawmakers are against the proposed bailout.