Stocks stage late-day turnaround

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Dumbest Moments in Business 2009...midyear edition

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NEW YORK (CNNMoney.com) -- Wall Street erased most of its losses by the close Wednesday, as investors set aside concerns about the economy to gear up for the quarterly reporting period, which got underway after the closing bell with Alcoa.

The Dow Jones industrial average (INDU) gained 15 points, or 0.2%. The S&P 500 (SPX) index lost 1 point, or 0.2%. The Nasdaq (COMP) ended just above unchanged.

Stocks slipped through most of Wednesday as investors continued to worry about the economy and the quarterly reporting period in the aftermath of a big run up. But after touching fresh multi-month lows in the afternoon, stocks bounced back.

After the close, Dow component Alcoa (AA, Fortune 500) reported a quarterly loss of 26 cents per share as the global recession ate into the price and demand for its precious metals. But the decline was narrower than the loss of 38 cents per share analysts expected, according to Thomson Reuters. Alcoa earned 66 cents a year ago.

Alcoa shares gained 5% in after-hours trading.

But most quarterly reports aren't due until later this month and the results are expected to be fairly grim. Profits for S&P 500 companies are expected to have fallen 36% from a year ago, according to the latest Thomson Reuters estimates.

"Expectations are reasonably low, like they were in the first quarter, so it won't be hard for companies to meet or exceed forecasts," said Linda Duessel, equity market strategist at Federated Investors.

"But the market is looking for evidence in the forecasts that there will be a recovery in the second half," she said. "If any major company says something really negative, we're not going to be prepared."

Stocks have drifted lower since mid-June on worries the economy won't stabilize as quickly as some had hoped. Those declines followed a three-month stock market rally that propelled the S&P 500 off of 12-year lows by about 40%.

"The market is basically going through what it normally does after a big advance off the bottom," said J. Stephen Lauck, president and CEO at Ashfield Capital Partners. "It's going to be bumpy as Wall Street sorts out what's going to happen in the next leg of this economic cycle."

The recent selloff has reflected worries about the economy, punctuated by the weaker-than-expected June jobs report, released last week. Now investors are looking to corporations to provide guidance about their profits and the economic outlook.

Lauck said that the market is nervous about the start of the earnings reporting period and what companies might say about the forecast for the economy and profits.

Google: Tech behemoth Google (GOOG, Fortune 500) said late Tuesday that it will challenge Microsoft (MSFT, Fortune 500)'s dominant Windows by launching a rival operating system called Chrome OS. The system will be available in the second half of 2010.

On the move: Google shares gained, but other big techs slipped including chipmakers Intel (INTC, Fortune 500), Advanced Micro Devices (AMD, Fortune 500) and Applied Materials (AMAT, Fortune 500).

Bank of America (BAC, Fortune 500), Morgan Stanley (MS, Fortune 500) and Goldman Sachs (GS, Fortune 500) were among the big bank decliners.

Among Dow movers, gains in Boeing (BA, Fortune 500), Johnson & Johnson (JNJ, Fortune 500) and Wal-Mart Stores (WMT, Fortune 500) helped offset weakness in bank, tech and telecom stocks.

Market breath was negative. On the New York Stock Exchange, losers beat winners nearly two to one on volume of 1.44 billion shares. On the Nasdaq, decliners beat advancers by two to one on volume of almost 2.52 billion shares.

Economy: May consumer credit fell $3.22 billion versus a revised decline of $16.7 billion in the previous month. Economists surveyed by Briefing.com thought it would fall by $8.8 billion.

The International Monetary Fund forecast global GDP would shrink by 1.4% in 2009, versus its earlier forecast of 1.3%. However, the IMF also lifted its forecast for 2010 growth to 2.5% from 1.9% previously.

G8: The leaders of the world's eight foremost industrialized nations met in L'Aquila, Italy Wednesday to discuss the global economy, climate change and world security issues. In addition to President Obama, the leaders of Japan, Britain, France, Italy, Germany, Canada and Russia are also due to speak.

Bonds: Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.31% from 3.45% late Tuesday. Treasury prices and yields move in opposite directions.

Other markets: In global trade, Asian and European markets ended lower.

Energy prices slipped, with U.S. light crude oil for August delivery falling $2.79 to settle at $60.14 a barrel on the New York Mercantile Exchange.

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

COMEX gold for August delivery fell $19.80 to settle at $909.30 an ounce.