Stocks swing positive

NEW YORK (CNNMoney.com) -- Stocks rebounded Tuesday afternoon, finding some momentum in a volatile session influenced by Goldman Sachs' earnings, concerns about the troubled credit market and the grim economic outlook.

The Dow Jones industrial average (INDU) added 0.3 percent with 2 hours left in the session. The broader S&P 500 (INX) index added 0.3 percent. The tech-fueled Nasdaq (COMPX) composite gained 0.6 percent.

Stocks had risen through mid morning as investors welcomed upbeat earnings from Goldman Sachs and Best Buy and news that the European Central Bank made billions available to keep the banking system liquid.

But gains wavered as the session wore on and investors returned to some of the broader worries of recent weeks. Afternoon buying in technology and commodities tempered the weakness in a very choppy session.

Goldman's earnings alone weren't enough to calm investors at the start of a big wave of bank sector earnings reports, noted Phil Dow, director of equity strategy at RBC Dain Rauscher.

"Goldman is a preeminent risk manager, and you've got to applaud that," Dow said. "But the market is concerned right now with the overall financial group and how they report earnings through the start of January," he said.

Morgan Stanley (MS, Fortune 500) is due to report results Wednesday and Bear Stearns (BSC, Fortune 500) on Thursday, with more companies to follow in the weeks ahead.

Stocks had slumped Monday and the previous week on worries about the economic outlook amid rising inflationary pressures and slower growth prospects.

Goldman Sachs (GS, Fortune 500) reported higher quarterly sales and earnings that topped estimates, managing solid results despite the current credit market crisis. Nonetheless, shares fell, as investors took a 'sell the news' reaction. In addition, investors may have been reacting to signs of a slowdown in several divisions.

Goldman was one of many big financial stocks falling, including Merrill Lynch (MER, Fortune 500), Citigroup (C, Fortune 500) and JP Morgan (JPM, Fortune 500).

Best Buy (BBY, Fortune 500) reported higher quarterly sales and earnings that topped forecasts, thanks to extra shopping days in November and more store openings. However, the electronics retailer cautioned that December and fourth-quarter sales will be constrained. Shares slipped over 1 percent.

A number of big technology shares rose, helping the Nasdaq and protecting the Dow from bigger losses. Gainers included IBM (IBM, Fortune 500), Intel (INTC, Fortune 500) and Cisco Systems (CSCO, Fortune 500).

A variety of gold and silver stocks gained as well, with the stocks responding to a rise in the underlying commodity prices.

Market breadth turned positive. On the New York Stock Exchange, winners beat losers by a slim margin on volume of 880 million shares. On the Nasdaq, advancers narrowly topped decliners on volume of 1.28 billion shares.

In other news: the ECB said it has made available unlimited funds at a set rate for the next two weeks, in a move to help with liquidity demands through the end of the year. The move follows an announcement last week that the ECB, the U.S. Federal Reserve and other banks have teamed up to make billions available for banks seeking loans.

Meanwhile, housing construction and building permits dropped in November, according to a government report released Tuesday. The decline was smaller than what economists had forecast, but nonetheless showed a continued deterioration in the market. (Full story)

Elsewhere on the housing front, the Federal Reserve proposed a much stricter set of rules for mortgage lenders as part of the central bank's effort to combat shady lending practices.

Treasury prices rose, lowering the yield on the 10-year note to 4.09 percent from 4.14 percent late Monday. Treasury prices and yields move in opposite directions.

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

U.S. light crude oil for January delivery fell $1.53 to $89.10 a barrel on the New York Mercantile Exchange, erasing early gains.

COMEX gold for February delivery rose $8.20 to $807.50 an ounce.