Dow Ends 8-Day Losing Streak, S&P Up for 2011

Stocks recovered from a sharp selloff in volatile trading Wednesday with the Dow breaking an eight-day losing streak, despite a handful of weak economic news, ongoing euro zone jitters and a possible U.S. credit downgrade.

The Dow Jones Industrial Average rebounded 29.82 points, or 0.25 percent, to finish at 11,896.44, snapping an eight-day losing streak. The Dow was down 166 points at session lows.

Coca-Cola and GE led the blue-chip gainers, while Caterpillar and Wal-Mart slipped.

The S&P 500 rose 6.29 points, or 0.50 percent, to close at 1,260.34. The index bobbed back into positive territory for the year after trading below its March low of 1,249.05 for most of the session.

The tech-heavy Nasdaq advanced 23.83 points, or 0.89 percent, to end at 2,693.07. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell near 23.

Among key S&P sectors, techs led the gainers, while energy lagged.

Volume was heavier than usual with the consolidated tape of the NYSE at 5.5 billion shares, while 1.35 billion shares changed hands on the floor.

“We’re churning after the last couple of selloffs…we’re volatile and whippy today,” said Kenny Polcari, managing director at ICAP Equities. “[The S&P 500] is clearly trying to hold above the 1,249 level—it will be the last significant support level.”

Despite the technical bounce, Polcari said investors need to continue watching macroeconomic developments over the week.

While both Moody's and Fitch confirmed their AAA-rating on the U.S. after President Obama signed a bill that averted a debt default, threats of future downgrades kept investors nervous. Several experts told CNBC that the deal simply "kicked the can down the road," and that at best the issue would be raised before the end of the year.

Gold closed at another record high at $1,663.40 an ounce, driven by deepening fears over the spread of the European debt crisis and amid data that showed a number of central banks bought gold in June.

Meanwhile, oil prices slumpedafter a government report showed a surplus in crude stocks and amid demand worries. U.S. light, sweet crude slipped $1.86 to settle at $91.93 a barrel, while London Brent crude fell $3.23 to settle at $113.23.

Oil stocks were among the day's biggest laggards, led by Marathon Oil , Chevron and ExxonMobil . In addition, at least two brokerages cut their price targets on Marathon Oil. Despite the day's loss, the sector is still the best performer for the year.

Research In Motion gained to lead the Nasdaq 100 gainers after the smartphone maker unveiled five new BlackBerry models, as it hopes to compete with Apple's iPhone and Android smartphones. RIM has plunged almost 57 percent this year.

Other large-cap techs gained, including Google and Intel .

Bank of America told state and federal officials that it wants protection against future litigation relating to mortgage servicing and is willing to reduce the amount owed by some of its troubled borrowers in exchange, according to the Wall Street Journal.

Among earnings, Comcast was flat after the parent company of CNBC posted higher profit. Rival Time Warner also posted better-than-expected results, helped by stronger advertising and boosted its full-year outlook.

MasterCard surged after the credit-card provider reported a better-than-expected profitas the firm processed more transactions and revenue increased.

However, Garmin declined mped after the GPS manufacturer posted a lower-than-expected profit.

Activision is due to report after the close. And GM , AIG and Kraft are among major companies slated to post earnings Thursday.

On the economic front, the pace of growth in the U.S. services sector ticked down in July to the lowest level since February 2010, according to the Institute for Supply Management. And factory orders fell in June, due to weak demand for transportation equipment, according to the Commerce Department.

Meanwhile, U.S. private employers added 114,000 jobs in July, topping economists' expectations, according to the ADP National Employment Report. Also on the jobs front, an unexpected increase in private sector job cuts in July helped push the number of announced U.S. job cuts to a 16-month high, according to a report from Challenger, Gray & Christmas.

The data come ahead of Friday's closely watched government jobs report, which is expected to show 85,000 nonfarm payrolls and a 9.2 percent unemployment rate.

European shares extended lossesas worries mounted over the spread of the euro zone debt crisis to Italy and Spain. Italian Prime Minister Silvio Berlusconi praised the solidity of the Italian economy, saying that markets had misjudged fundamentals, attempting to calm jitters that the euro zone's third-largest economy may be dragged into a financial crisis.

Coming Up This Week:

THURSDAY: Weekly jobless claims, money supply, chain-store sales; Earnings from GM, AIG, Kraft, Sunoco
FRIDAY: Employment situation, consumer credit; Earnings from P&G

More From