Search for Bargains Drives Rebound

Investors ventured back into the market yesterday in search of bargains, helping it stage a partial rebound from one of the worst trading days since October.

After falling nearly 680 points on Monday, the Dow Jones industrial average closed up 3.3 percent, or 270 points, at 8419.09. The Standard & Poor's 500-stock index was up 4 percent, or 32.60 points, to 848.81, while the tech-heavy Nasdaq composite index was up 3.7 percent, or 51.73 points, to 1449.80.

But the rally could be short-lived, analysts said. Investors are focused on how long the U.S. recession will last and growing signs that it could be more severe than expected. That could become clearer Friday when the Labor Department releases November's unemployment figures, which are anxiously awaited by market watchers.

After taking some of the biggest losses Monday, the financial sector help lead the way back yesterday. Citigroup climbed 11.9 percent to $7.22 a share, while J.P. Morgan Chase gained 9.2 percent to $28.53 a share.

General Electric had the largest gain on the Dow, climbing 13.6 percent to $17.61 a share. The company said its profits this year would be weighed down by the economic downturn, but its shares rallied as investors cheered its announcement that it would maintain its stock dividend.

Many investors and analysts were focused on the beleaguered auto sector. General Motors and Ford surged about 5 percent after they submitted detailed business plans to Congress in another bid for federal aid.

These packages offered a dire financial picture of the country's automakers but also outlined strategies for adding electric and fuel-efficient vehicles to their production lines. GM said it needed a $4 billion cash injection this month to avoid collapse.

"Now that there are certain concessions, it lends a certain amount of optimism that they turned a corner," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "It has led investors to conclude that they will get some sort of bailout."

That helped overshadow dismal November U.S. sales data from the firms. Chrysler reported that sales fell 47 percent to 85,260 vehicles compared with last year, while Ford's sales dropped 30 percent to 118,319 vehicles. General Motors' November sales fell 41 percent to 152,552.

Crude oil slid $2.32 to $46.96 a barrel on the New York Mercantile Exchange -- the lowest level since May 2005. Slumping fuel demand has driven down prices, which are now $100 below their peak in July.