Stocks rallied Tuesday as investors scooped up bargains and were encouraged by news that General Electric will keep its dividend intact.
The market had initially pulled back after General Motors reported disappointing November sales but then rebounded in the final hour of trading, closing at their high for the day high.
The Dow Jones Industrial Average gained 270 points, or 3.3 percent, to close at 8419.09. The S&P 500 index rose 4 percent and the Nasdaq advanced 3.7 percent.
On Monday, the Dow shed 700 points, giving back more than half of the gains it accumulated in the prior five sessions, its best five-day rally in 75 years.
CNBC parent General Electric was the biggest gainer on the Dow Tuesday, jumping 14 percent, after the conglomerate said it will maintain its 2009 dividendand pare down its finance arm, GE Capital.
General Motors shares rose 5.7 percent and Ford gained 5.9 percent as the auto makers once again made their pitch to Congress for a bailout, this time offering specific numbers about how much they need and what they're going to do to earn it.
Today was also the day auto makers reported November sales and it wasn't pretty: GM's sales tumbled, more than expected, while Ford saw sales slip 31 percent, in-line with expectations.
Earlier, Ford gave the market a shot in the arm as CEO Alan Mulally said his company has enough money to get through 2009 and may not need help from the government.
Even foreign auto makers are feeling the pinch: 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.
President-elect Barack Obama told the nation's governor's that they will play an integral role in designing an economic-recovery plan. Obama is expected to name New Mexico Gov. Bill Richardson as Commerce Secretaryon Wednesday.
After GE, bank stocks were some of the biggest gainers on the Dow as several announced job cuts to help them weather the crisis, with Citigroup and Bank of America gaining 12 percent each.
Bank of America is expected to cut 10,000 investment banking jobs when it integrates the businesses of Merrill Lynch , CNBC has learned. JPMorgan Chase said late 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.
Meanwhile, 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.
Tech stocks rebounded after being among the hardest hit in Monday's selloff: Intel , Dell , eBay and GPS maker Garmin all rose more than 4 percent.
But hand-held maker Research In Motion dropped more than 6 percent after an analyst downgradeamid worries about revenue. Palm had suffered for the same reason but eked out a gain of 7.5 percent. Palm, which has struggled to keep up in the hand-held market, missed analysts' estimates by a long shot in its preliminary second-quarter results and said it would slash its work force.
Yahoo shares jumped 7.1 percent following news that former AOL chief Jonathan Miller is trying to raise money to buy all or part of the Internet portal.
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. Sears shares finished up more than 13 percent.
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. Its shares rose 8 percent.
>> Check in on how the holiday season is shaping up at CNBC's Holiday Central.
Beazer Homes shares fell 8 percent after the homebuilder reported its quarterly loss more than tripledas revenue plunged and income taxes ballooned.
Delta Airlines shares rose 6.4 percent after the airline hinted that more job cuts may be on the way as it works to pare back capacity.
United parent UAL jumped 7.8 percent after the carrier said it would be willing to cut capacity but doesn't think such a step will be necessary.
Still to Come:
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.
