Stocks try to rise, again

NEW YORK (CNNMoney.com) -- Stocks swung higher Wednesday afternoon after seesawing throughout the session as investors weighed fears about the credit and mortgage markets with upbeat economic news, including a mild reading on core inflation.

The Dow Jones industrial average (up 60.48 to 13,089.40, Charts) added 0.5 percent, with just over 2 hours left in the session, after having fallen below the 13,000 level earlier in the session for the first time since April 25. The broader S&P 500 (up 10.28 to 1,436.82, Charts) index added 0.8 percent and the tech-fueled Nasdaq Composite (up 14.74 to 2,513.86, Charts) index gained 0.7 percent.

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Stocks slumped Tuesday on fresh worries about the mortgage and credit markets and disappointing profit forecasts from retailers Home Depot and Wal-Mart Stores.

The concerns remained in place Wednesday. But after four straight days of declines for the Dow and Nasdaq, trading was more subdued, with stocks seesawing back and forth across the unchanged line as investors weighed the day's events.

On the upside: the July consumer price index (CPI) rose modestly, as expected, in terms of both overall and core inflation; the NY Empire State index, a regional manufacturing report, was stronger than expected; industrial production and capacity utilization both increased in July; and net foreign purchases jumped.

On the downside: oil prices jumped to nearly $74 a barrel; Applied Materials' revenue forecast disappointed; and financial stocks remained vulnerable to the worries about the credit and mortgage markets.

In other news, an industry report showed that the price of a typical home in the United States continues to drop, but at a slower pace than recently. A separate report showed that homebuilder confidence is at a 16-year low.

The Dow has lost nearly 1,000 points, or 7 percent, since topping the 14,000 level almost a month ago. And the market probably has further to fall before it can move back higher, analysts argue.

"I think we're in the midst of a correction and that we have a bit more to go on the downside," said Douglas Roberts, chief investment strategist for Channel Capital Research.

"But it's not unusual for stocks to pull back a bit after a big run up," he said. "As for the longer term, I don't think this is the start of a bear market."

Countrywide Financial (down $2.05 to $22.41, Charts, Fortune 500), the leading U.S. mortgage lender, slipped nearly 5 percent Wednesday after Merrill Lynch downgraded it to "sell" from "buy" on worries about the mortgage market, Briefing.com reported. On Tuesday, the company said that foreclosures and delinquencies rose in July to their highest level in several years.

However, Thornburg Mortgage (up $3.95 to $11.56, Charts) bounced back after sliding 47 percent on Tuesday on worries about the mortgage lender's future. The stock recovered after the company's CEO said Thornburg has no plans to file for Chapter 11 bankruptcy protection.

Shares of Accredited Home Lenders (up $0.85 to $6.35, Charts) jumped 13 percent after private equity firm Lone Star said it will extend its offer for the struggling subprime mortgage lender. On Monday, Accredited said it had sued Lone Star to force it to complete the proposed $400 million takeover.

Applied Materials (down $0.65 to $20.59, Charts, Fortune 500) slipped 3 percent after the chip gear maker said late Tuesday that current-quarter orders and revenue would fall from the last quarter. That overshadowed the company's otherwise upbeat quarterly sales and earnings report.

Among Dow 30 movers, 25 stocks gained and 5 slipped. Components Citigroup (up $0.77 to $46.43, Charts, Fortune 500), JP Morgan (up $0.65 to $43.95, Charts, Fortune 500), DuPont (up $0.69 to $47.85, Charts, Fortune 500), Microsoft (up $0.62 to $28.89, Charts, Fortune 500) and Home Depot (up $0.36 to $33.88, Charts, Fortune 500) led the gainers.

Market breadth turned mixed. On the New York Stock Exchange, losers beat winners by nine to seven on volume of 1.03 billion shares. On the Nasdaq, advancers topped decliners by a slim margin on volume of 1.28 million shares.

U.S. light crude oil for September delivery rose $1.32 to $73.70 a barrel on the New York Mercantile Exchange, gaining after a weaker-than-expected weekly oil inventories report and amid worries about a tropical storm approaching the Texas coast.

Treasury prices were little changed, with the benchmark 10-year note yield at 4.73 percent.

In currency trading, the dollar rose versus the euro and fell versus the yen.

COMEX gold for December delivery fell 70 cents to $679 an ounce.