Blue chips rallied near midday Tuesday after a volatile morning, as investors considered Hewlett-Packard's strong forecast and Congressional hearings on the $700 billion bank bailout and the automaker sector.
Hewlett-Packard forecast fiscal fourth-quarter profit that is above analysts' forecasts, despite the sagging economy. HP also lifted its fiscal-year 2009 forecast. It was welcome news for tech investors after both Intel and Cisco warned about weaker sales in the current quarter.
The morning's economic news was far less buoyant. Home prices plummeted in the third quarter by a record 9% versus a year ago, amid a flood of foreclosures. On the upside, bargain hunters have been scooping up properties in some of the hardest-hit areas.
A separate report showed that inflationary pressures remain moderate. Wholesale prices posted the sharpest monthly decline on record in October due to the collapse in oil prices over the last four months. But prices excluding food and energy, the so-called "core" reading, rose more than expected.
The House Financial Services Committee is holding a hearing Tuesday regarding the $700 billion bank bailout, with Secretary Treasury Henry Paulson, Federal Reserve Chairman Ben Bernanke and FDIC Chairman Sheila Bair all speaking.
Both Paulson and Bernanke told Congress that the bailout has been working to help stabilize the financial system, despite recent criticism.
Lawmakers are especially concerned by last week's decision to stop buying up bank's troubled assets and instead take ownership stakes in the firms.
Later today, Congress begins debating whether to bail out the hard-hit industry with an additional $25 billion on top of the $25 billion General Motors, Ford Motor and Chrysler have already received.
COMEX gold for December delivery fell $3.20 to $738.80 an ounce.
U.S. light crude oil for December delivery rose 13 cents to $55.08 a barrel on the New York Mercantile Exchange, the lowest close since January 2007.
Borrowing rates were little changed from the previous day, with the credit market continuing to stall after a month long improvement. The 3-month Libor rate fell to 2.22% from 2.4% Monday, while overnight Libor was unchanged at 0.4%, according to Bloomberg.com. Libor is a key bank lending rate.