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Stocks Bounce Back After Sharp Selloff

Stocks opened higher Tuesday, clawing back some of what they lost Monday, when the Dow shed nearly 700 points.

But analysts said the bounce was likely to be temporary and that stocks may test the lows reached in October again.

"No doubt we can continue to have a short-term rally, but… if we look at the global economy, contraction is on the way, corporate earnings are coming down sharply," independent strategist Bob McKee said on CNBC.

Bank stocks were mixed as investors sorted through a slew of news on how the institutions are handling the crisis in the industry.

JPMorgan Chase said late on Monday it will eliminate about 9,200 jobs at the former Washington Mutual, which on Sept. 25 became the largest U.S. bank to fail, while Bank of America is expected to cut 10,000 investment banking jobs when it integrates the businesses of Merrill Lynch , CNBC has learned.

Goldman Sachsfaces a possible $2 billion loss for the fourth quarter — its first ever as a public company — according to a report in the Wall Street Journal. Goldman shares continued to slide after tumbling nearly 17 percent on Monday.

CNBC parent General Electric was the biggest gainer on the Dow after the conglomerate said it will maintain its 2009 dividendand pare down its finance arm, GE Capital.

The Big Three auto makers — General Motors , Ford and Chrysler — will submit to Congress their restructuring plansin hopes of convincing Congress to bail them out.

And, later today, auto makers are expected to report their November sales. U.S. auto makers are expected to post declines of at least 30 percent, hurt further by speculation that one or more could go bankrupt. But even foreign auto makers like Toyota Motor and Honda are expected to feel the pinch, reporting declines of at least 25 percent.

Toyota said it will cut management bonuses by 10 percent, amid reports that it will halt production for two days at some plants at the end of this month.

Tech stocks rebounded after being among the hardest hit in Monday's selloff: Intel , Dell , eBay and GPS maker Garmin all rose sharply.

But hand-held makers Research In Motion and Palm tumbled after both stocks were downgraded by analysts. Palm missed analysts' estimates by a long shot in its preliminary second-quarter results and said it would slash its work force.

As the holiday-shopping season gets into full swing this week, it was bad news for another retailer: Searsposted a wider-than-expected lossand announced more store closings. Same-store sales were down 11 percent at Sears stores and 7 percent at Kmart stores.

Office-supply retailer Staples reported a 43 percent drop in quarterly profit due to restructuring charges, the acquisition of Corporate Expense and a lawsuit settlement. Excluding those charges the company earned 42 cents a share, narrowly beating analyst estimates.

>> Check in on how the holiday season is shaping up at CNBC's Holiday Central.

Beazer Homesreported its quarterly loss more than tripledas revenue plunged and income taxes ballooned.

Delta Airlines hinted that more job cuts may be on the way as it works to pare back capacity.

United parent UAL said it would be willing to cut capacity but doesn't think such a step will be necessary.

This Week:

TUESDAY: Paulson discusses US-China relations; Auto sales; Auto hearings; Fed's Plosser speaks; FDIC's Sheila Bair speaks
WEDNESDAY: Weekly mortgage applications; Challenger, ADP jobs reports; ISM services report; weekly crude inventories; Fed's Lacker speaks; Fed beige book
THURSDAY: Chain-store sales; BOE, ECB rate decisions; weekly jobless claims; factory orders; natural-gas inventories; Earnings from Toll Brothers
FRIDAY: November jobs report; consumer credit

Send comments to cindy.perman@nbcuni.com.