Ending two days of heavy losses, Wall Street closed in the green on Wednesday even as shares of mortgage giants Fannie Mae and Freddie Mac lost about a quarter of their value on the day. 

Today's Market

The Dow Jones Industrial Average rose 68.88 points, or 0.61% to 11417.43, the Standard & Poor’s 500 index gained 7.85 points, or 0.62%, to 1274.54 and the Nasdaq Composite picked up 4.72 points, or 0.20%, to 2389.08. The FOX 50 added 2.78 points, or 0.31%, to 910.74.

The gains follow an ugly start to the week, that has already seen the blue chips dive nearly 250 points, an inflation report that spooked Wall Street and new drama surrounding Fannie Mae (FNM) and Freddie Mac (FRE). 

Hewlett-Packard (HPQ) led the gainers on the Dow on Wednesday, jumping nearly 6% on its better-than-expected earnings. Financial giants Bank of America (BAC) and JPMorgan Chase also rose sharply. On the downside, chip giant Intel (INTC) closed the day about 1% lower. 

The Nasdaq Composite closed slightly higher after HP's strong quarterly results. Foster Wheeler (FWLT) and Hansen (HANS) enjoyed the largest percentage gains on the Nasdaq 100, jumping 7% each. Conversely, Dish Networks (DISH) and Amylin Pharmaceuticals (AMLN) helped lead the way down on the index. 

Following several days of steep losses, financial stocks advanced modestly on the day despite several bearish factors. Fannie Mae and Freddie Mac, the mortgage giants that own or back more than $5 trillion of U.S. mortgages, plunged by about 25% a piece on Wednesday as the clouds of uncertainty hanging above them loom larger. 

The stocks have been hammered this week as the market has taken the view that as borrowing costs soar for Fannie and Freddie, the government will be forced to bailout plan that may wipe out the common shareholders. Fannie CEO Daniel Mudd told National Public Radio Wednesday morning that the company has not asked the Treasury for help and they haven't been offered any. 

According to The Wall Street Journal, Freddie executives are scheduled to meet with Treasury officials to potentially explore whether the government can clarify its intentions to remove some of the current uncertainty. A mortgage industry source told FOX Business reporter Peter Barnes that James Lockhart, director of the Office of Federal Housing Enterprise Oversight, the regulator of Fannie and Freddie, cut short his vacation to deal with the ongoing mess. 

Energy stocks showed the most strength on Wednesday, with names like Hess (HES) and Chevron (CVX) rising sharply. The gains come as crude oil prices rose for the second day in a row, closing at $114.98 a barrel, up 45 cents on the day. 

Oil prices threatened to post more sizable gains earlier in the day before a Department of Energy oil inventory report showed crude supplies surged by 9.4 million barrels last week. Then again, that same report showed gasoline stockpiles plunged by about twice as much as expected. Even with two straight days of gains, crude prices have plunged 20% from the all-time record close of $145.29 a barrel, set on July 3. 

Corporate Movers

BJ’s Wholesale (BJ) fell sharply even after it beat the Street with second-quarter adjusted earnings of 58 cents per share on $2.70 billion in revenue. Analysts polled by Thomson Reuters had been expecting 57 cents per share on $2.67 billion in sales. BJ’s also boosted its 2008 earnings guidance to $2.10 to $2.20 per share, compared to $2.14 expected by analysts.

Lehman Brothers (LEH) nearly inked a deal to raise $5 billion from a South Korean wealth fund earlier this month before talks fell apart, the New York Post reported. The newspaper did not report why the deal didn't come to fruition nor what the structure of the transaction looked like. Lehman CEO Dick Fuld has been under pressure to raise cash to protect against expected losses through the rest of the year, including an estimate from JPMorgan Chase for a $4 billion writedown in the third quarter.  

Hewlett-Packard’s (HPQ) fiscal third-quarter results exceeded analyst expectations, sending its shares higher. The world’s largest computer maker posted adjusted-earnings of 86 cents per share, up from 71 cents a year ago, as sales jumped 10% to $28.03 billion. Analysts had been looking for 84 cents on $27.4 billion in sales. HP’s earnings forecast for the fiscal fourth quarter topped current estimates but it sees revenue slightly below expectations.

General Motors (GM) needs to raise $7.3 billion to ensure it won’t run out of cash through 2009, an analyst at Lehman Brothers predicted in a research note. The automaker will likely end the year with $21.6 billion of cash, meaning the company won’t need to raise external cash through 2010. Lehman also expanded its 2008 loss-per-share view on GM to predict a loss of $15.68, up from $14.51.

Wachovia (WB) sold $40 million of land and construction loans to a venture led by LandCap Partners, The Wall Street Journal reported The loans have a book value or around $80 million but many of them are in distress due to delinquent payments or diving value, the newspaper reported. 

eBay (EBAY) drastically lowered the fee it charges customers who buy fixed-price items. The online auction leader cut fees to 35 cents, down from as much as $4. eBay also extended the length of a listing to 30 days, up from seven.