Stocks closed higher for the second straight day on positive signs for the economy and strong earnings report.
Trading remained volatile as the major indexes bounced around all day. The Dow Jones Industrial Average and Standard & Poor's 500 both finished up in the 1% range, while the Nasdaq rose nearly 2%.
The announcement of an economic stimulus package in Washingtondid little to move markets either way. Congressional leaders and Treasury Secretary Henry Paulson outlined terms of the plan, which will provide individual rebates of up to $600 and $1,200 for married couples plus $300 per child, along with adjustments to loan limits.
But Wall Street seemed to be motivated more by earnings and economic signals than a helping hand from the government, and stocks showed signs for the second consecutive day that they may have found the much-sought bottom.
"There are some small building blocks in place to suggest that we could see a short-term bounce of possibly in the neighborhood of 5 to 10 percent," said Richard Sparks, senior equities analyst at Schaeffer Investment Research in Cincinnati. "But I don't think it's really directly related to the stimulus package."
The upward trend in trading -- still volatile as indexes swung between positive and negative territory throughout -- came a day after the market posted a dramatic session-ending rally that saw the Dow in a 600-point swing that ended up more than 2 percent to the good.
It also was the second consecutive day that major indexes finished at their highs for the session, though there was uncertainty over whether stocks had nowhere to go but up.
"This is still a very fragile market so I'm not willing to say it's the bottom because that's a fool's game to play," Sparks said.
Wednesday's rally was fueled in large part by bond insurers like Ambac and MBIA on news of a possible bailout. But shares headed in the other direction Thursday when a New York regulator voiced caution over any such plan, saying it would take time and hammering out the details would be arduous.
The market expressed uncertainty through the day and the volatility was expected to continue into the foreseeable future, even though the CBOE Volatility Index was down.
"I see no catalyst for volatility declining. Today's relatively quiet to what we've seen and we still had a 140-basis-point trading range in the S&P," said Steve Sachs, director of trading at Rydex Investments in Rockville, Md.
Earnings, Economy Drive Trading
In financials, Morgan Stanley shares dropped as the company confirmed plans to cut about 1,000 workers to deal with what it expects to be a tougher business environment.
In the economy, good news came early today, with a report on unemployment showing the number of claims actually dropping1,000 to 301,000, far less than a projected increase to 320,000.
At the same time, data on housing showed the first-ever national price decline for single-family homes and a continued slump in sales that was more than analysts expected. But home builder shares gained after the news was released.
Earnings from Lennar served as a snapshot of the housing troubles: The home builder said its fourth-quarter loss widened and predicted the new housing market would continue to lag, but the company's shares gained when an analyst said Lennar was taking the right steps to combat the slump.
As the Nasdaq was posting solid gains it was weighed by E-Bay , which lowered its outlook and saw shares tumble, and Apple, which continued a freefall that has seen the tech bellwether lose one third of its market value in the past month.
Sirius Satellite and Qualcomm were among the index's leading gainers.
And railroad Union Pacific gained sharply after it reported that strong pricing helped offset increased fuel costs, flat volumes and bad weather to help the company post stronger-than-expected quarterly profit.