Stocks struggle back at close

NEW YORK (CNNMoney.com) -- Stocks ended a rocky day by closing just above their opening levels, as buyers returned to the market to scoop up troubled financial stocks.

The Dow Jones industrial average (Charts) gained 51 points, or 0.4 percent, according to early tallies. The S&P 500 (Charts) gained 0.5 percent. The tech-heavy Nasdaq composite (Charts) rose 0.1 percent.

Oil closed at a record high, with January crude surging $3.21 to settle at $98.03 a barrel on Nymex, surpassing the previous closing record of $96.70 set Nov. 6.

Bond prices declined slightly, with the 10-year Treasury down 4/32 to yield 4.09 percent.

Shares of mortgage purchaser Freddie Mac tumbled over 25 percent as it reported steep third-quarter losses and dividend cut for the fourth quarter.

Here's a look at what was moving near the close.

Bad news Tuesday from mortgage backers Freddie Mac and Fannie Mae dragged the mortgage sector - and the broader markets - down.

Freddie Mac (Charts, Fortune 500) reported a steep quarterly loss and said it had set aside $1.2 billion in the quarter to account for credit losses.

Fellow government-sponsored mortgage backer Fannie Mae (Charts) slumped 24 percent. The company has been under pressure over the past few weeks after it revealed its mortgage losses, with investors questioning whether the losses are bigger than the company has so far acknowledged.

Hewlett-Packard (Charts, Fortune 500) reported quarterly sales and revenue that topped expectations late Monday.

Dow component Exxon Mobil (Charts, Fortune 500) jumped on a UBS upgrade, Briefing.com reported.

It was one of many Dow stocks bouncing back after Monday's retreat. Other gainers included Alcoa (Charts, Fortune 500), IBM (Charts, Fortune 500) and Microsoft (Charts, Fortune 500).

Market breadth was positive. On the New York Stock Exchange, winners were even with losers on volume of 1.9 billion shares. On the Nasdaq, decliners led advancers three to two on volume of 2.6 billion shares.

Fed funds futures show Wall Street is betting the central bank will cut rates by at least a quarter-percentage point at the Dec. meeting. But, as tends to happen following a sustained period of bad news, there may also have been some speculation that the Fed could step in early.

An emergency meeting "would be highly unlikely," said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. "Anytime you have a really bad day, like yesterday, or something like with Freddie Mac this morning, you hear these rumors."

In morning economic news, October housing starts rose more than expected, while permits, a measure of builder confidence, fell more than expected.

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

COMEX gold for December delivery rose $16.50 to $794.50 an ounce.