Late rebound drives Wall Street higher

updated 5:32 p.m. ET Nov. 18, 2008

NEW YORK - Wall Street rebounded Tuesday in another turbulent session after investors rushed back into the market when 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 last. That has 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 when 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.

Concerns the economy has fallen into a recession that could be the worst downturn in more than two decades weighed on investors after disappointing data on wholesale prices and the housing market.

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."

The market is searching for a much-elusive bottom, and could yet again retest lows, analysts said. 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 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.

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