9:42 am - Stocks rise after 2 days of heavy selling

Stocks rise after 2 days of heavy selling NEW YORK (AP) - 1107b--wallstreet Buyers returned to Wall Street Friday after two days of heavy losses,mindful of the economy's growing problems but attracted by stocks' lower prices.Analysts said the advance was to be expected as Wall Street experiences a rockyrecovery from October's devastating selling. The major indexes jumped more than 2 percent, including the Dow Jonesindustrial average, which rose nearly 250 points in light trading. For the week,the Dow and broader benchmarks like the Standard & Poor's 500 index lost about 4percent after surging 10 percent or more last week. Friday's trading was a mini-version of the market's performance over thepast two weeks, with investors upbeat, then realizing there was little basis inreality for their resurgent confidence, then changing their minds again. The market briefly came off its highest levels of the session afterPresident-elect Obama reiterated at a news conference that there is a great dealof hard work to be done to restore the economy to health. Investors hadoptimistically sent prices higher, only to temporarily pull back when Obamaunderscored what they already know: that the economy's problems won't be easilysolved. George Shipp, chief investment officer at Scott & Stringfellow, said Obamaappeared to be trying to telegraph to the market not to expect too muchimmediately. Obama, noting that he has until January before taking office, saidhe will work to support an economic stimulus plan and will seek ideas forhelping the auto industry. "My expectation is that he lowers the bar and buys the time," Shipp said."Certainly there is no reason to create any undue expectations right now." The market fluctuated after Obama spoke, then righted itself to close nearits best levels of the day. Hank Smith, chief investment officer at Haverford Investments said themarket's turns aren't a surprise. "I think it's absolutely part of the bottoming process," Smith said. "TheOct. 10 low has been tested again a number of times." The blue chips hit anintraday low of 7,882.51 on Oct. 10. Friday's economic and corporate news reminded the market that the countrycould be in for a deep and protracted recession. The Labor Department said the nation's employers cut 240,000 jobs inOctober, hurtling the U.S. unemployment rate to a 14-year high of 6.5 percent.The market had expected employers to cut 200,000 jobs and for the unemploymentrate to rise 6.3 percent. Meanwhile, Ford Motor Co. reported a $129 million third-quarter loss andannounced plans to cut more than 2,000 additional white-collar jobs. GeneralMotors Corp. said it lost $2.5 billion in the quarter and warned it could runout of cash in 2009. The struggling automaker also said it has suspended talksto acquire Chrysler. Although the day's news was on its face worse than expected, investors weredrawn by prices beaten down the past two sessions and some relief that thereports weren't more grim. "We're coming off of a very oversold market that had already braced itselffor bad news out of Detroit and certainly bad economic data in terms of thelabor report," said Peter Cardillo, chief market economist at Avalon Partners. The market is following the pattern of volatility that analysts warned wouldprevail for some time to come. Obama's election was preceded by a big rally, during which the benchmarkStandard & Poor's 500 index surged 18.3 percent in six sessions up throughTuesday. This was followed by a two-day loss of about 10 percent in the majorindexes, including a 929-point drop in the Dow, as investors turned their focusonce more to the economy's woes. "There are three factors that are driving this market: psychological,fundamental and technical," Smith said. "The psychological is fear and panic.We've certainly seen that." The fundamental factor is investors don't know exactly how the currentcredit crisis is going to affect the economy. And the technical factor that isplaying in to the market is the forced selling from hedge funds and mutual fundsthat have to raise cash for redemptions, Smith said. Nov. 15 is the cutoff for shareholders to notify fund managers of theirintent to cash out investments before year-end, which means a sudden influx of"sell" orders could force funds into dumping more investments. Analysts expectthis to continue to add to the volatility in the market. The Dow rose 248.02, or 2.85 percent, to 8,943.81. The broader S&P 500 index added 26.11, or 2.89 percent, to 930.99, and theNasdaq composite index rose 38.70, or 2.41 percent, to 1,647.40. The Russell 2000 index of smaller companies rose 9.95, or 2.01 percent, to505.79. Advancing issues outnumbered decliners by more than 2 to 1 on the New YorkStock Exchange, where consolidated volume came to a light 4.80 billion shares,compared with 5.96 billion shares traded Thursday. For the week, the Dow fell 4.1 percent, the S&P 500 index lose 3.9 percent,the Nasdaq slid 4.3 percent and the Russell fell 5.9 percent. Paper losses for the week in U.S. stocks came to $500 billion, according tothe Dow Jones Wilshire 5000 Composite Index, which reflects nearly all stockstraded in America. Despite the gains Friday, investors have not lost sight of the potential fora deep and protracted recession. Obama will inherit an economy marred by ahousing collapse, mounting unemployment, hard-to-get credit and financial marketupheaval when he assumes office early next year. Investors are watching closely for whom Obama selects as the next Treasurysecretary, as well as whom he appoints to key Cabinet positions. Additionally,investors are mindful of how the government's $700 billion financial rescuepackage will be further implemented under a new administration. Obama met Fridaywith economic experts ahead of his press conference to discuss steps aimed atrepairing the economy. To provide fresh relief, House Speaker Nancy Pelosi said Democrats will pushfor another round of economic stimulus later this month. The weak economic data on Friday reflect the freeze in the credit marketsthat began in mid-September following the bankruptcy of investment bank LehmanBrothers Holdings Inc., and the subsequent pullback in spending among fearfulconsumers. This has forced companies to cut jobs, said Michael Sheldon, chiefmarket strategist at RDM Financial Group. "Comments that we're hearing from CEOs when they report their earningsindicate that economic activity fell off the cliff," he said. In other corporate earnings news, Sprint Nextel Corp. reported a loss of$326 million in the third quarter as it continued to lose customers. Thenation's third-largest wireless provided had posted a profit in the year-agoperiod. Sprint dropped 31 cents, or 8.4 percent, to $3.37. Investors fled General Motors following its quarterly reports but Fordadvanced. GM tumbled 44 cents, or 9.2 percent, to $4.36, while Ford rose 4cents, or 2 percent, to $2.02. The dollar fell against most other major currencies, while gold prices rose.Light, sweet crude rose 27 cents to settle at $61.04 a barrel on the New YorkMercantile Exchange after falling sharply during the week. The three-month Treasury bill's yield slipped to 0.28 percent from 0.30percent late Thursday. A lower yield indicates increased demand. The yield onthe benchmark 10-year Treasury note rose to 3.79 percent from 3.69 percent lateThursday. Bank-to-bank lending rates fell again, though, suggesting that banks aremore willing to lend to one another -- a positive signal for the tight creditmarkets. The London interbank offered rate, or Libor, for three-month loans indollars dropped for the 20th straight day by 0.10 percent to 2.29 percent, thelowest level since November 2004. Overseas, Japan's Nikkei index fell 3.55 percent, and Hong Kong's Hang SengIndex rose 3.29 percent. Britain's FTS