NEW YORK (CNN/Money) - A late rally erased all of the stock market's losses Wednesday as investors looking beyond a series of profit warnings continued buying shares on any dips.
The Dow Jones industrial average rose for the first time in a week, recouping all of an 82-point tumble, as an upbeat outlook from Procter & Gamble offset profit disappointments from American Express and Merck.
Down by as much as 26 points, the Nasdaq composite index finished higher for a second straight session.
Wednesday's modest gains came a day after the Federal Reserve cut interest rates for the 11th time this year in an effort to get consumers and businesses spending again.
"It tells us the enthusiasm of investors will eventually turn this around," Robert Stovall, market strategist at Prudential Securities, told CNNfn's Street Sweep.
Stovall linked some of the gains to developments in Afghanistan, where the Taliban government harboring Osama bin Laden has been all but defeated.
The session still saw plenty of losers. Shares of American Express fell 2.5 percent after the financial services company said it will cut jobs, take millions of dollars in charges and miss earnings forecasts this quarter. Merck fell another 3.5 percent after tumbling 10 percent Tuesday on news that the drugmaker's profits will stagnate next year.
The two companies join Kroger, Gap, Ford Motor and dozens of others that have pre-announced financial shortfalls this month.
But the day's gains continue a trend from late September, when stocks began rising in anticipation of better profits next year.
"I think it's going to set us up for a little Santa Claus rally in a few weeks," David Briggs, head of trading at Federated Investors, told Street Sweep. "I think the buying on the dips mentality is going to hold."
That certainly happened Wednesday, with the Dow industrials snapping a four-session losing streak, edging up 6.44 points to 9,894.81. The Nasdaq composite index gained 9.46 to 2,011.39 while the Standard & Poor's 500 index rose 0.31 to 1,137.07.
On the New York Stock Exchange, losing stocks edged outs winning ones as 1.4 billion shares changed hands. Nasdaq losers topped winners 9-to-8 as 1.8 billion shares traded.
In other markets, Treasury securities advanced. The dollar fell against the euro and was little changed versus the yen.
Household names
The day's action, one week after the major indexes rose to their highest levels since August, may not keep stocks from declining for a second straight year. That hasn't happened since 1974.
The Dow's biggest winner, Procter & Gamble (PG: up $3.25 to $79.95, Research, Estimates), said its financial results will top forecasts in the current quarter. Lehman Brothers upgraded the maker of Tide, Crest and Pringles and raised its stock price target to $95.
But the losses continued for Merck (MRK: down $2.18 to $58.52, Research, Estimates) a day after the drugmaker said next year's profit will fall short, showing no growth from this year's level.
Rivals Pfizer (PFE: down $0.11 to $40.24, Research, Estimates), Bristol-Myers Squibb (BMY: down $3.30 to $50.45, Research, Estimates) and Johnson & Johnson (JNJ: down $0.09 to $56.05, Research, Estimates) also fell.
American Express (AXP: down $0.84 to $33.42, Research, Estimates) announced 5,500 to 6,500 job cuts, mostly in its travel business, and warned that fourth-quarter profit will be lower than expected. The company said it plans to take as much as $280 million in charges.
The job cuts by American Express follow word from the Labor Department that the nation's unemployment rate rose to a six-year high last month. Employers shed more than 300,000 jobs.
Other financial services companies fell, including J.P. Morgan Chase (JPM: down $0.13 to $38.37, Research, Estimates) and Citigroup (C: down $0.46 to $48.15, Research, Estimates).
"I think most participants are leery of the economy," said Mike Farrell, money manager at David L. Babson. "Maybe the economy will get better, but maybe it's not as good as we think it is."
The Federal Reserve's latest rate cut took short-term borrowing costs to a 40-year low. But cheaper money has not helped the stock market. The Dow industrials are down 8.2 percent on the year, while the Nasdaq is off 18.6 percent. Both indexes fell last year.
Still, by saying the economy remains soft, Fed officials kept alive hopes for another rate cut next year.
Stocks have had a good run since Sept. 21, the market's low following the terrorist attacks. The Dow is up 20 percent since then, while the Nasdaq has gained 41 percent.
The losses continued for Calpine (CPN: up $0.41 to $15.91, Research, Estimates), which has shed 30 percent of its value since the New York Times Sunday compared the electricity company to bankrupt Enron (ENE: down $0.06 to $0.66, Research, Estimates). Calpine has disagreed with the article.
The week winds down with several pieces of economic data. Retail sales for November, due Thursday, are expected to have fallen 3.1 percent, according to the consensus estimate of economists surveyed by Briefing.com.
Thursday also brings wholesale inflation data. The Producer Price index is expected to have fallen 0.4 percent in November. In another sign that inflation remains nearly nonexistent, the November's Consumer Price index, due Friday, is also forecast to decline. 
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