A late-day surge on Wall Street ended another volatile session Tuesday and allowed the major indexes to avoid closing at fresh 5-1/2-year lows despite lingering economic fears. 

Today’s Market

The Dow Jones Industrial Average jumped 151.17 points, or 1.83%, to 8424.75, the broader S&P 500 added 8.36 points, or 0.98%, to 859.11 and the Nasdaq Composite picked up 1.22 points, or 0.08%, to 1483.27. The consumer-friendly FOX 50 gained 10.08 points, or 1.54%, to 663.52.

As has been the case for much of the past few weeks, the markets fluctuated wildly. The Dow surged more than 200 points by midday, only to sink into the red before surging back to green in the final minutes. 

“There’s a lot of uncertainty and it keeps getting restated. There’s no sense of bottom or comfort. There’s no reason to get involved in the sense of investing," said Frank Davis, director of sales and trading at LEK Securities. 

The afternoon climb helps ease the pain from the previous two days during which the Dow plummet 561 points. It also allowed the three major indexes to steer clear of fresh lows after flirting with those levels earlier in the day. For the Dow, Tuesday marked just the third positive close in the last 10 trading sessions. 

The back-and-forth action came as much of Wall Street's attention focused on the unfolding rescue drama in Washington as lawmakers grilled Treasury Secretary Henry Paulson on the financial bailout and Detroit executives requested a rescue of their own. 

Hewlett-Packard (HPQ) was easily the biggest percentage winner on the Dow. Energy giants ExxonMobil (XOM) and Chevron (CVX) also posted big gains, helping to counter fresh multi-year lows from General Motors (GM) and Citigroup (C).

Despite strength from tech stocks, the Nasdaq Composite performed much weaker than the broader market, closing near its lowest level since May 2003. A number of retailers on the Nasdaq 100 slumped to fresh 52-week lows, including Amazon.com (AMZN) and Sears (SHLD). 

Wall Street found a rare rallying cause in HP as the tech bellwether unexpectedly released preliminary earnings that beat the Street. HP also sounded confident about the current quarter and fiscal 2009, issuing guidance above what analysts were looking for. 

Rescue Testimony in Focus

The markets were unfazed by testimony on Capitol Hill from Paulson and Federal Reserve Chairman Ben Bernanke, the architects and lead salesmen of the government’s financial rescue plan. Paulson defended the use of the rescue funds but also pointed out the package wasn't intended as a cure-all.

"The rescue package was not intended to be an economic stimulus or an economic recovery package; it was intended to shore up the foundation of our economy by stabilizing the financial system, and it is unrealistic to expect it to reverse the damage that had already been inflicted by the severity of the crisis," he said. 

Bernanke credited the rescue plan for easing some of the turmoil in the credit markets. He said there are "some signs that credit markets, while still quite strained, are improving."

The Big Three auto makers were also in focus as executives of General Motors (GM), Ford (F) and Chrysler LLC appeared before a Senate panel to plead their case for a rescue of their own. Congress is hotly debating a bailout package for the automakers -- which are burning through cash at a stunning rate -- to help save them from possible bankruptcy.

The testimony comes a day after the Democrats proposed $25 billion in new aid for the Big Three by amending the $700 billion rescue plan, commonly called TARP. However, the White House reiterated its opposition Tuesday to lending any more than the $25 billion in aid already appropriated for the auto makers.

Paulson said TARP funds shouldn't be used for the auto makers, but also said it isn't desirable to have an auto company fail given the poor state of the economy. 

While the equities markets flirted with 5-1/2 -year lows, crude oil prices sank to fresh 22-month lows on Tuesday. The price of a barrel of crude ended at $54.39, down 56 cents. The commodity has been slammed by global recession fears, diving more than 62% from record highs set in July.

Data Dump

Reflecting the plunge in oil prices, U.S. producer prices took a record fall in October, a new government report showed. The Labor Department said its producer price index fell 2.8% last month, much greater than the 1.8% decline economists had forecasted. The energy component of the report took its biggest decline since July 1996.

Excluding volatile food and energy prices, core producer prices rose 0.4% in October, matching the gains made the month before. Economists had forecasted a more modest increase of 0.1% in core inflation.

Corporate Movers

Yahoo! (YHOO) saw its shares surge after the Internet company said CEO Jerry Yang plans to step aside as soon as a replacement is found. Former eBay (EBAY) CEO Meg Whitman is not interested in taking the job, Dow Jones Newswires reported. 

InBev's (INB) $52 billion buyout of rival brewer Anheuser-Busch (BUD) was finalized on Tuesday after Chinese regulators removed the final hurdle to the deal. 

Home Depot (HD) topped expectations with a third-quarter profit of 45 cents per share even as sales slid 6.2% to $17.8 billion. While the world's largest home improvement company stood by its full-year profit outlook, it now sees a steeper decline in full-year sales. 

Pepsi Bottling (PBG) hit a new annual low after the company announced plans to slash more than 3,000 jobs and cut its full-year forecast below analyst expectations.

Saks (SKS) posted a worse-than-expected adjusted loss of 13 cents per share and said it sees capital spending substantially below its 2008 levels. The luxury department store operator said its same-store sales fell 11.5% in the quarter.

Medtronic (MDT) fell sharply after the medical device maker’s quarterly earnings missed estimates and the company slashed its full-year earnings forecast below what analysts were calling for.

Corning (GLW) plunged to 52-week lows after the company withdrew its fourth-quarter and 2009 guidance, citing declining LCD glass demand.