Dow up 151 in late-day rally

By Charley Blaine and Elizabeth Strott

Wall Street stared at the abyss today -- the possibility that stock prices might fall to 2002 levels -- and blinked.

Just before 3 p.m. ET, the Dow Jones industrials were down 168 points to 8,105 and seemed poised to test their Oct. 10 intraday low of 7,882.

Then buyers came in and pushed the market higher. The Dow finished up 151 points, or 1.8%, to 8,425. The Standard & Poor's 500 Index closed up 8 points, or 1%, at 859. The index tested but did not break below its closing low of the year.

The Nasdaq Composite Index finally pulled ahead, finishing up 1 point, 0.1%, to 1,483.

The close was more relief than triumph and came at the end of yet another volatile day. Thanks to a bullish earnings report from Hewlett-Packard (HPQ, news, msgs), the Dow had been up as much 204 points in the morning before the rally faded.

Half of the Dow's gain was due to three stocks: Hewlett-Packard, up 14.5% to $33.49; ExxonMobil (XOM, news, msgs), up 4% to $76.33; and Chevron (CVX, news, msgs), up 3.7% to $73.40.

Meanwhile, the S&P 500 got an extra boost by moves of managers of index funds who had to adjust their funds to account for the removal of brewer Anheuser-Busch and the addition of Stericycle (SRCL, news, msgs), named today to replace it. Anheuser-Busch is being taken out of the index because of its upcoming acquisition by Belgium's InBev. Stericycle, a waste-management company, was up 3.8% to $61.13.

Futures trading suggest U.S. stocks will open lower on Wednesday. Asian stocks opened lower on Wednesday as well.

While the rally was welcome, it was just the third positive day for stocks in the last 10 sessions, and the market remains weak. The S&P 500's close was its lowest since March 14, 2003. The Dow's close was its lowest since March 25, 2003, and the Nasdaq's close was its worst since May 1, 2003.

The market is still getting hit by a great deal of selling pressure, Louise Yamada, managing director of Louise Yamada Technical Research Advisors, told Bloomberg Radio. "There's a growing possibility we'll break the 2002 lows." The S&P 500 bottomed at about 770 in October 2002.

The market was buffeted for much of the day by weak financial and technology stocks, a report showing the most pessimism among home builders since 1985 and growing unease about whether the U.S. auto industry will survive.

Citigroup (C, news, msgs) was off 6% to $8.36. JPMorgan Chase (JPM, news, msgs) was off 1.9% to $32.14.

CEOs from General Motors, Ford Motor and Chrysler were to testify before the Senate Banking Committee, and they warned of catastrophe if they don't get help.

Chrysler CEO Robert Nardelli said his company was close to running out of money. Ford CEO Alan Mulally said a collapse of rival GM would be felt by Ford's operations "within days, if not hours" because competing manufacturers are served by the same parts suppliers.

• Get free, real-time stock quotes on MSN Money

Crude oil fell 56 cents to $54.39 today. It was the lowest close since January 2007. Investor demand for oil has been sinking along with the stock market in recent months. Oil closed at an all-time high of $145.08 on July 11.

Asian markets closed lower in the overnight session, with Japan's Nikkei 225 Index shedding 2.3% and Hong Kong's Hang Seng Index losing 4.5%. The MSCI Asia Pacific Index lost 3.2%.

European stocks gained. London's FTSE 100 Index was up 1.1%, and the broader DJStoxx 600 Index was up 0.6%.

Energy prices -- New York close

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$54.39	$54.95	-$0.56	-19.79%	-43.33%
Heating oil (per gallon)	$1.7579	$1.7910	-$0.0331	-12.38%	-33.65%
Natural gas (per million BTU)	$6.5160	$6.5330	-$0.0170	-3.94%	-12.92%
Unleaded gasoline (per gallon)	$1.1368	$1.1746	-$0.0378	-21.13%	-54.36%

HP surprises with good news

Hewlett-Packard was up 14.5% to $33.59, tops among the 30 Dow stocks and among S&P 500 stocks. The gain was worth 34 points of the Dow's gain alone.

H-P wasn't due to report its fiscal-fourth quarter until Monday. But, in a preannouncement, the computer maker said earnings rose 20% to $1.03, 3 cents better than the Wall Street estimate.

The company said adjusted earnings for the full year will be between $3.88 and $4.03 per share, higher than the consensus estimate of $3.86.

• Top stocks blog: U.S. analysts still hate 'sell' ratings

For much of the day, other tech stocks did not share in HP's glow but recovered in that final rally.

Qualcomm (QCOM, news, msgs), down as much as 3.4%, closed up 0.5% to $31.81. Intel (INTC, news, msgs) recovered from a 2.2% loss to end up 0.9% to $13.11, and Microsoft (MSFT, news, msgs) closed up 2.2% to $19.62. (Microsoft is the publisher of MSN Money.)

Google (GOOG, news, msgs) didn't quite get back to break-even. It finished at $297.42, down 0.9%. It had hit $288.43, its lowest level since September 2005.

Amazon.com (AMZN, news, msgs), down nearly 9% in the early afternoon, saw the decline trimmed to 3.2% at $38.44. Barclays Capital analyst Douglas Anmuth cut his estimates for the company. He said Wall Street's estimates for the online retailer look too high given negative comments on consumer spending from Best Buy (BBY, news, msgs), Target (TGT, news, msgs) and others.

Paulson, Bernanke testify before Congress

Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke testified before the House Financial Services Committee about the $700 billion financial rescue plan.

Paulson rejected using the government's financial-rescue program as a "panacea" for economic difficulties, clashing with lawmakers who want the funds to help beleaguered homeowners.

"The rescue package was not intended to be an economic stimulus or an economic recovery package,'' Paulson said in testimony to the House Financial Services Committee in Washington. The Troubled Asset Relief Program was designed to stabilize financial markets and the flow of credit and "is not a panacea for all our economic difficulties," Paulson said.

But Rep. Barney Frank, D-Mass., who heads the House panel, cut off Paulson during the question-and-answer session, saying "the bill couldn't have been clearer" in also being aimed at reducing foreclosures. Paulson told lawmakers he has no plans to use the second half of the $700 billion program, indicating it will be up to the incoming Obama administration to resolve the matter.

Bernanke said that the efforts to help the financial markets are working. Bank-capital injections "are continuing to bring stability to the banking system and have reduced some of the pressure on banks to deleverage, two critical first steps toward restarting flows of new credit," the Fed chief said in prepared remarks.

The Treasury Department is planning to leave hundreds of billions remaining in the financial rescue plan for President-elect Barack Obama, The Wall Street Journal reported today.

Separately, the Treasury Department said Dec. 8 will be the last day for any private bank to seek aid from the $700 billion package.

The Treasury Department has committed $290 billion of the initial $350 billion allocated to buying equity stakes in financial companies and insurance giant American International Group (AIG, news, msgs).

Producer prices sink; home prices fall

A report on producer prices showed a 2.8% plunge in October, the biggest year-over-year decrease since 1947, the Labor Department said this morning. Wholesale gasoline prices tanked 24.9% last month -- also the biggest drop since 1947.

Economists were looking for an overall decline of 1.8% last month after a 0.4% decline in September.

The core PPI, which excludes volatile food and energy prices, rose 0.4%. Economists were looking for a 0.1% rise in the core number.

The government will release its October report on consumer prices Wednesday.

The National Association of Realtors offered another worrisome report on the housing market this morning. Home prices fell 9% in the third quarter from last year's levels, the NAR said, because of soaring foreclosures.

The median price for a single-family home fell in four out of five states, the group said, with the national median price falling 2.9% from the second quarter to $200,500 in the third quarter.

Big Three plead for help

General Motors (GM, news, msgs), Ford Motor (F, news, msgs) and Chrysler were making their cases for another $25 billion in aid to the Senate today. In September, Congress approved $25 billion in loans to help the automakers convert to more fuel-efficient cars and trucks.

GM shares were down 2.8% to $3.09.

Ford shares were down 2.3% to $1.68 after the company said it was cutting its stake in Japanese automaker Mazda by nearly two-thirds.

Ford, which currently owns 33.4% of Mazda, will sell a 20% stake for $540 million. Mazda will buy about 7% and a consortium of outside investors the other 13%, while Ford will retain a stake of just over 13%.

"When the airplane is too heavy and you're losing power, you have to throw out what you can," Edwin Merner, president of Atlantis Investment Research in Tokyo, told Bloomberg News. "It's a desperate, desperate situation."

The automakers are burning through their cash reserves as the auto industry struggles to survive amid the economic slowdown and a change to more fuel-efficient vehicles.

GM this morning said it will wait two weeks before reimbursing 6,500 U.S. auto dealers for sales incentives. The delays will help GM keep more cash on hand.

Yahoo CEO to leave

Yahoo (YHOO, news, msgs) Chief Executive Officer Jerry Yang will step down after a rough 17 months on the job.

Yang failed to secure a $47.5 billion acquisition offer from Microsoft, telling shareholders Yahoo would be better off on its own -- but then failed to produce the hoped-for results.

• Top Stocks blog: Sighs of relief as Yang resigns

The Internet giant said it is searching for a replacement.

"Jerry and the board have had an ongoing dialogue about succession timing, and we all agree that now is the right time to make the transition to a new CEO who can take the company to the next level," Yahoo Chairman Roy Bostock said in a statement.

Yahoo had hoped to improve revenue results through an ad partnership deal with Google, but that deal came apart earlier this month.

Yahoo stock has fallen more than 50% since Microsoft pulled its $33-per-share offer in May. Yahoo shares rose 8.7% to $11.55.

On Nov. 7, Microsoft CEO Steve Ballmer said the tech giant was not interested in acquiring Yahoo, but at least one analyst thinks some type of deal will now happen.

"We believe (this) could pave the way for a variety of strategic alternatives. We expect the street to view the move positively, and a short-term rally in shares is likely," Banc of America Securities analyst Brian Pitz wrote in a note to clients.

Yang will remain a board member and return to his former role as "Chief Yahoo" -- a job focused on Web software strategy.

Home Depot profit falls

Home improvement retailer Home Depot (HD, news, msgs) posted a 31% decline in third-quarter profit this morning, amid a slowdown in demand related to the housing slump.

The company earned $756 million, or 45 cents per share, down from $1.09 billion, or 60 cents per share, in the same quarter a year ago. Still, Home Depot's earnings topped Wall Street's estimate of 38 cents per share.

Home Depot said sales for the company's fiscal year could fall by 8%, more than a previous forecast.

Shares of Home Depot rose 3.6% to $20.71.

Rival Lowe's (LOW, news, msgs) on Monday reported a 24% drop in its third-quarter profit and lowered guidance for the current quarter. Lowe's shares were up 0.6% to $19.10.

Andrew Rosenbaum contributed to this report.

Short hits from the markets -- New York close

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	0.110%	0.090%	0.020	-74.71%	-96.50%
5-year Treasury note yield	2.195%	2.305%	-0.110	-22.19%	-36.47%
10-year Treasury note yield	3.535%	3.684%	-0.149	-10.96%	-12.39%
30-year Treasury bond yield	4.144%	4.206%	-0.062	-5.15%	-7.06%
Currencies
U.S. Dollar Index	87.460	87.140	0.320	1.29%	14.04%
British pound in dollars	$1.4963	$1.4963	0.0000	-6.99%	-24.78%
Dollar in British pounds	£0.6683	£0.6683	0.0000	7.51%	32.94%
Euro in dollars	$1.2621	$1.2641	-0.0019	-1.00%	-13.64%
Dollar in euros	€ 0.7923	€ 0.7911	0.0012	1.01%	15.80%
Dollar in yen	96.93	96.24	0.69	-1.71%	-13.34%
Canadian dollar in U.S. dollars	$0.812	$0.814	-$0.0013	-1.83%	-18.20%
U.S. dollar in Canadian dollars	$1.232	$1.229	$0.0029	1.88%	22.25%
Commodities
Gold	$732.70	$742.00	-$9.30	2.02%	-12.57%
Copper	$1.6715	$1.6670	$0.00	-8.61%	-45.03%
Silver	$9.5500	$9.3300	$0.22	-1.85%	-35.99%
Corn	$3.8000	$3.8575	-$0.06	-5.35%	-16.58%
Crude oil (NYMEX) (per barrel)	$54.39	$54.95	-$0.56	-19.79%	-43.33%