Stocks Bounce Back; Alcoa Leads Dow

Stocks rebounded Wednesday after a major selloff in the previous session as earnings season gets into gear.

Stocks hit their lowest level in 10 weeks on Wednesday, amid growing doubts about the economic recovery and jitters ahead of earnings. Validating investor fears about the economy, an Obama economic adviser suggested that a second round of stimulus may be needed.

Alcoa led the Dow Wednesday, gaining more than 3 percent, ahead of earnings from the aluminum giant after the closing bell. Analysts expect a third straight loss.

This morning, Family Dollar reported its profit jumped 36 percent, beating expectations, as cost-conscious consumers headed to the dollar store for bargains on staples.

Google announced late Tuesday plans for a PC operating system based on its Chrome Web browser that will challenge Microsoft 's Windows operating system.

Amgen shot up more than 15 percent after an osteoporosis drug met trial goals.

Oil stocks including ExxonMobil and Chevron skidded as crude fell below $63 a barrel.

Defensive stocks were back in vogue with the pharmaceutical sector leading gainers on the DJ Stoxx 60 index.

Pharma analyst Leerink Swan, in an overview of the industry, said movements in the sector would remain difficult to predict as healthcare reform looms, the economy remains in flux, and calls for deficit reduction increase.

ArcelorMittal, the world's biggest steelmaker, saw its shares fall 1 percent premarket after it won European Union regulatory approval on Wednesday for its takeover of the Dutch unit of U.S. blanks maker Noble International.

Health care stocks were among the best performers on Tuesday, as rumors spread of a compromise in the Obama administration's push for a public health insurance alternative— a compromise that investors see as less harmful to private insurers and hospital operators.

Those stocks will be on the watch list again Wednesday, as Vice President Joseph Biden and HHS Secretary Kathleen Sebelius make what's billed as a "major health care announcement" at 10:30 am New York time.

Other sectors seen as defensive such as telecoms and utilities were also higher.

Group of Eight leaders arrived in Italy to discuss the global economic downturn. Draft documents obtained by Reuters showed the debate over whether the dollar should remain the key reserve currency was played down and hopes for a climate change breakthrough had been overstated.

But sources in the Canadian delegation told CNBC that it is too early to say whether the final release will maintain the same stance.

The Treasury auctions another $19 billion in 10-year notes Wednesday after a successful 3-year Treasury auction the previous day. Results will be out at 1 pm New York time.

There's not much in the way of data Wednesday. Consumer credit is reported at 3 pm New York time. Weekly oil inventory data will be released at 10:30 am, and OPEC releases its world oil outlook at 9 am.

At 10 am tomorrow, a Congressional Committee on oversight and government reform holds a hearing that the GOP appears ready to make into an indictment of Obama's economic reforms.

The government could unveil its plan and release names of participants in its Public Private Investment Program plan, which is designed to create a market for banks' toxic assets.

— Peter Schacknow, Senior Producer, CNBC Breaking News Desk