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Dow Rebounds After NY Fed Report

Stocks bounced back Wednesday after a better-than-expected manufacturing report from the New York Fed and as Procter & Gamble raised its dividend.

Techs remained underwater as Intel's lack of guidance rattled the sector. Stocks had opened lower across the board following the Intel news and a Wal-Mart warning.

HSBC downgraded U.S. equities by two notches to "underweight" from "overweight," saying "earnings have yet to trough and there is surely more financial debris still to surface."

On Tuesday, stocks dropped about 2 percentas retail sales unexpectedly declined and bank worries simmered ahead of some key earnings.

A report that showed manufacturing in New York contracted less severely than expected helped keep Wednesday's decline in check.

In other economic news, consumer prices recorded their first annual drop since 1955 and industrial production fell for a fifth straight month in March, while mortgage applications slippedlast week even though borrowing rates remained low, though the results may have been skewed by the Easter holiday.

FOR INVESTORS:

Still to come: The NAHB's April housing-market index is due out at 1 pm, followed by the Federal Reserve's "beige book" of regional economic conditions at 2 pm.

Procter & Gamble jumped more than 2 percent after the maker of Tide detergent and Crest toothpaste raised its dividend 10 percent, adding to a string of payouts over the past 50 years.

Global tech stocks declined as Intel reported earnings of 11 cents a share, less than half of the 25 cents it earned a year earlier, but managed to beat expectations. The big takeaway was that Intel said PC sales "bottomed out" in the first quarter — essentially calling a bottom — but what rattled the sector was that the chip giant refused to provide an outlook.

Bleak results from the Netherlands' ASML and India's Infosys also contributed to the fall in tech stocks.

"Tech stocks have moved significantly this year … so perhaps they have gotten a little bit ahead of themselves," Hank Smith, chief investment officer at Haverford Investments said on CNBC this morning.

There is a false sense of optimism over the economy and in the markets, this is still a bear market and the current rally is a bear-market rally, Smith said.

Meanwhile, Wal-Mart cast a shadow over the market after the CEO Mike Duke said he doesn't see a quick end to the recesssionas weakness persists.

In Asia, Dallas Fed President Richard Fisher said he shared President Obama's view that though the U.S. economy is not "out of the woods" yetbut added that there are "glimmers of hope" for a recovery in the future.

"The stimulus program is kicking in, our efforts to restore some vibrancy to the credit markets are taking grip", Fisher told CNBC.

Financial shares were under pressure as investors worry that Goldman Sachs's share offering could prompt other banks to follow suit.

JPMorgan Chase and Citigroup are expected to report first-quarter earnings later this week. Bank of America reports on Monday.

According to a New York Times report, the Obama administration is drawing up plans to disclose the conditions of the 19 banks in the countryand will reveal some sensitive details of the stress tests now being completed.

European banks took a hit Wednesday after UBS , Switzerland's largest bank, said it will cut 8,700 jobs and expects a $1.75 billion first-quarter loss.

In other jobs-related news, Yahoo is planning to cut hundreds of jobs ahead of its first-quarter earnings report, the New York Times reported.

On the plus side for tech, eBay said it had reached a tentative agreement to buy a controlling stake in its South Korean counterpart GMarket, the largest such company by revenue in that country. The deal would be valued at $24 a share, the Wall Street Journal reported.

After the closing bell on Tuesday, BlackRock announced plans toraise $5 billion to $7 billion worldwide to buy toxic assets from U.S. financial institutions under a planned US government program.

Abbott Laboratories shares skidded after the drug maker's sales fell short of expectations but one-time gains and solid stent demand boosted earnings.

Starbucks shares dropped after Deutsche Bank lowered its rating on the stock to "sell" from "hold."

Still to Come:

WEDNESDAY: Industrial production; weekly crude inventories; NAHB housing index; Fed's beige book
THURSDAY: Housing starts; weekly jobless claims: Philly Fed survey; Fed's Lockhart, Yellen speak; Earnings from JPMorgan, Harley-Davidson, Nokia, Southwest Air and Google
FRIDAY: CNBC's 20th Anniversary; consumer sentiment; Bernanke speaks; Earnings from Citigroup, GE and Mattel

Send comments to cindy.perman@nbcuni.com.