Stocks climb on productivity, earnings

Video

More video

Fears that the housing slowdown is gaining steam coupled with a sluggish market performance overseas will have investors biting their nails today. Play video

Video

More video

Fears about the economy are growing. What it means for you. Play video

NEW YORK (CNNMoney.com) -- Stocks solidified modest gains Wednesday morning, after fluctuating early on, as a better-than-expected report on productivity helped investors shake some recession fears and encouraging corporate earnings fueled some bargain hunting.

The Dow Jones (INDU) industrial average gained 0.6% about 1-1/2 hours into the session. The broader Standard & Poor's 500 (SPX) index added nearly 0.7%. The Nasdaq (COMP) composite rose almost 0.9%.

Rescission fears pummeled stocks Tuesday after the Institute for Supply Management released a report showing unexpected weakness in the service sector. The Dow sank 370 points, or about 3%, marking its biggest one-day point loss since mid-October and worst one-day percentage fall since Feb. 27, 2007.

A report out Wednesday morning from the Labor Department on worker productivity may have tempered some of Wall Street's recession jitters. The report showed a 1.8% increase in productivity for the fourth quarter, which is down from 6% in the third quarter, but above economists' expectations of only 0.5%, according to Briefing.com.

Positive signs from the media sector helped bring in some bargain hunters after a steep selloff in the previous session.

Walt Disney (DIS, Fortune 500) reported earnings late Tuesday that beat analysts' expectations, citing strength at its ESPN cable network and its theme park business. Shares were more than 5% higher in early action.

Shares of media conglomerate Time Warner (TWX, Fortune 500), the parent company of CNNMoney.com, rose 2% after the company reported earnings that met Wall Street estimates. CEO Jeff Bewkes confirmed that the company is looking at restructuring AOL and Time Warner Cable.

Telecom company JDS Uniphase (JDSU) also reported earnings that beat estimates late Tuesday. Shares of the company were more than 30% higher in early trading.

On the down side, shares of homebuilder Toll Brothers (TOL, Fortune 500) sank nearly 5% in early trading after the company said revenue tunneled 22% and warned that the company faces more challenges.

On the commodities front, the government reported a big increase in crude inventories, driving oil prices down more than $1 per barrel.

In economic news, a number of Federal Reserve officials are scheduled to speak Wednesday, including Richmond Fed President Jeffrey Lacker, who said Tuesday that a "mild recession" is possible.

Other markets. Treasury prices fell, as investors shifted to equity investments, lifting the yield on the benchmark 10-year note to 3.60% from 3.58% late Tuesday. Bond prices and yields move in opposite directions.

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

U.S. light crude oil for March delivery fell $1.46 to $86.83 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery plunged $16.90 to $907.20 an ounce.