Stocks bounce after selloff

Wall Street moves higher after 'correction' thanks to DuPont's earnings forecast, technical market support.

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NEW YORK (CNNMoney.com) -- Stocks rebounded Wednesday morning, following Tuesday's big selloff, after DuPont boosted its earnings outlook for 2007 and 2008, but gains were limited by ongoing worries about the threat of a recession.

The Dow Jones industrial average (INDU), the broader S&P 500 (INX) index lost and the Nasdaq (COMPX) composite all gained in the early going.

Chemical maker DuPont (DD, Fortune 500) said that it will post stronger-than-expected earnings in the fourth-quarter 2007 and full-year 2007, as well as full-year 2008, despite the slowing economy. That sent shares of the Dow component up almost 7 percent in morning trading.

But DuPont was one of few bright spots, as investors continued to worry about the outlook for the economy. Investment bank Goldman Sachs added to the growing talk of a pronounced slowdown, saying that recent data suggest the economy is falling into a recession.

Goldman Sachs said that as a result of this slowdown, the Federal Reserve is likely to cut the fed funds rate, a key short-term lending rate, to 2.5 percent by late 2008. The fed funds rate currently stands at 4.25 percent after the Fed cut it three times in a row.

St. Louis Fed president William Poole said that fundamentals remain strong and that it is too early to tell if the problems in the housing market will push the economy into recession, Briefing.com reported. Poole was a voting member of the Fed's policy committee in 2007.

Fed chairman Ben Bernanke is due to speak Thursday afternoon in Washington, D.C., on the economic outlook and monetary policy.

Stocks tumbled Tuesday, extending the abysmal start to the new year, on growing worries that the economy could be headed for a recession amid the credit and housing market fallout.

Year-to-date, the S&P 500 has lost about 5.3 percent, the Dow industrials has fallen 5.1 percent and the Nasdaq composite has fallen 8 percent.

Overall, the three major gauges have now fallen at least 10 percent off the recent highs hit in October on a closing level - the technical definition of a market correction. That can spark a big rally, as in November, with people using the selloff as an opportunity to jump back in at lower levels. Or a correction can lead to more selling and eventually a bear market, defined as a drop of 20 percent off the highs.

Treasury prices slumped, raising the corresponding yields on the 10-year note to 3.81 percent from 3.77 percent late Tuesday. Treasury prices and yields move in opposite directions.

U.S. light crude oil for February delivery fell 33 cents to $96 a barrel on the New York Mercantile Exchange Tuesday.

COMEX gold for February delivery fell $1.80 to $878.50 an ounce, bouncing off record highs hit on Tuesday. To top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.