interesting report cnn on bounce back in late

Stocks pull off comeback
Wall Street bounces back as investors scoop up shares hit in the recent selloff.
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See all CNNMoney.com RSS FEEDS (close) By Alexandra Twin, CNNMoney.com senior writer
January 9 2008: 5:23 PM EST


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Markets are down significantly from '07 highs, and analysts fear a recession is imminent.
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NEW YORK (CNNMoney.com) -- Stocks snapped back Wednesday, erasing earlier losses, as investors set aside worries about the economy to scoop up a variety of issues battered in the recent selloff.

The Dow Jones industrial average (INDU) added 1.1 percent. The broader S&P 500 (INX) index gained almost 1.4 percent and the Nasdaq (COMPX) composite gained 1.4 percent.

Stocks had flip-flopped on both sides of unchanged throughout the session as investors mulled the latest woes for mortgage financiers, DuPont's improved earnings forecast, oil and gold prices near records and Goldman Sachs' forecast that the economy may already be in a recession.

Stocks tumbled again in the afternoon, led by the financial sector. But in the last hour of trade, investors staged a recovery.

"It's the old rubber-band effect, where the market was very compressed and just snapped back from a vastly oversold condition," said Steven Goldman, market analyst at Weeden & Co.

Treasury prices slumped, boosting the corresponding yields. The dollar bounced back versus other major currencies.

After the close, Dow component Alcoa (AA, Fortune 500) reported higher quarterly earnings that topped estimates, starting off the fourth-quarter reporting period on a plus note. Shares of Alcoa gained around 4 percent in after-hours trade. (Full story).

Also after the close, Target (TGT, Fortune 500) said its CEO will retire in May amid slumping sales. He will be replaced by the retailer's president. Target shares were little changed in after-hours trade. (Full story).

In the first five trading days of the year, through Tuesday's close, the S&P 500 lost about 5.3 percent, while the Dow industrials fell 5.1 percent and the Nasdaq composite fell 8 percent.

"It's been a bad start to the year," said Greg Church, president at Church Capital.

Church said a bigger snapback could be in the works in the day's ahead, but that it depends a lot on what the financial sector does, since the broad market is taking its cue from the financial sector.

The financial sector led the late-session turnaround Wednesday, with JP Morgan (JPM, Fortune 500), Citigroup (C, Fortune 500), Morgan Stanley (MS, Fortune 500) and Merrill Lynch (MER, Fortune 500) all recovering from earlier losses.

Recession S.O.S. - goosing growth
In corporate news, MBIA (MBI) said it will cut its dividend and raise $1 billion from the sale of notes, as a means of raising money and avoiding a ratings downgrade. The bond insurer also said that regulators have probed how thoroughly it disclosed risks, and that regulators are now looking at the $1 billion investment it received in December from Warburg Pincus.

MBIA shares fell 4 percent, recovering from bigger losses thanks to the end of the day turnaround.

Countrywide Financial (CFC, Fortune 500) slipped for a second session after the mortgage lender said that the delinquency and foreclosure rate of home loans in its portfolio jumped in December. Shares fell 6 percent and dragged on Washington Mutual (WM, Fortune 500).

On the upside, E*Trade Financial (ETFC) gained almost 7 percent. The company said