Stocks post biggest gain in two weeks

Bargain hunters finally appeared Wednesday, giving the battered stock market its biggest lift in more than two weeks.

Upbeat earnings projections from companies including Hewlett-Packard, Du Pont and Humana helped dispel part of the gloom that had pushed most key indexes into their deepest decline in five years.

The Dow Jones industrial average, which includes HP and Du Pont, finished with a gain of 146.24 points, or 1.2%, to 12,735.31. Broader indexes also were higher.

For most of the session, however, it appeared the market was headed for another loss. Brokerage Goldman Sachs helped fuel more selling by warning that the economy might already have fallen into a recession because of the housing market’s woes and tighter credit.

The Dow was down as much as 88 points before surging in the final 90 minutes in heavy trading.

Analysts said there was no single catalyst for the turnaround. Many said the market had simply fallen too fast and was overdue for a relief rally.

“We certainly have reached some oversold levels with all the uncertainty going forward about interest rates and the economy,” said Frank Lesh, an analyst at FuturePath Trading in Chicago.

The Standard & Poor’s 500 index rose 18.94 points, or 1.4%, to 1,409.13. The Nasdaq composite index rallied 34.04 points, or 1.4%, to 2,474.55.

The Russell 2,000 small-stock index added 1% to 712.12.

Rising stocks outnumbered losers by 3 to 2 on the New York Stock Exchange.

After a plunge Tuesday, most key indexes were down more than 11% from their 2007 highs and had fallen through the levels from where they had rebounded after the sell-offs in August and November.

That raised fears that a bear market had begun, meaning a decline that would shave at least 20% from major indexes.

If the market continues to recover in the next few days, it could encourage many potential sellers to take their fingers off the trigger, at least for the time being.

Wall Street bulls are hoping for help from Federal Reserve policymakers Jan. 30 in the form of another cut in short-term interest rates.

In the meantime, the market’s direction may depend on the trend in fourth-quarter corporate earnings reports and what companies say about 2008.

Du Pont shares jumped $2.03 to $44.78 on Wednesday after the chemical giant raised its earnings forecasts for 2007 and 2008, citing better-than-expected fourth-quarter sales.

HP rose $1.25 to $44.44 after one of the tech leader’s executives said the company expected its earnings to withstand an economic slowdown.

The stock had fallen for seven straight sessions.

After the closing bell, aluminum titan Alcoa reported fourth-quarter operating earnings of 36 cents a share, better than the 34-cent average estimate of analysts. The stock, which added 25 cents to $31.25 in regular trading, jumped to $32.55 in after-hours activity.

Among the day’s market highlights:

Shares of troubled mortgage lender Countrywide Financial continued to slide, losing 35 cents to $5.12. But most other financial issues rebounded after sharp declines since the new year began. The NYSE financial stock index rose 1.3%.

Bear Stearns gained $3.65 to $74.82 after the brokerage’s new chief, Alan Schwartz, said the company had “adequately” valued its mortgage-backed securities and other holdings and didn’t expect to take further write-downs.

Many tech issues followed HP higher. Apple jumped $8.15 to $179.40, Google shot up $21.52 to $653.20 and Microsoft gained 99 cents to $34.44.

Managed-healthcare company Humana surged $3.87 to a record $85.79 after affirming its earnings growth estimate for fiscal 2008. Also in the healthcare sector, many drug shares added to recent gains. Pfizer rose 45 cents to $23.92 and Novartis jumped $1.54 to $58.51.

Crude oil prices retreated, with near-term futures off 66 cents to $96.57 a barrel.

Treasury bond yields, which fell to multiyear lows Tuesday as worried investors sought a haven, edged up. The 10-year T-note rose to 3.82% from 3.78%.

Gold continued its record run, with near-term futures adding $1.50 to an all-time high of $879.50 an ounce in New York.