Stocks stage an afternoon comeback

NEW YORK (CNNMoney.com) -- After tumbling early Monday morning, stocks bounced back to end the session still down, but much closer to breakeven.

The Dow Jones industrial average (INDU) fell 40 points, or 0.4%, closing the session at 11,052, according to early tallies. The S&P 500 (SPX) fell 2 points, or 0.1%, and the Nasdaq (COMP) lost 9 points, or 0.4%.

Stocks had fallen nearly 1.5% earlier in the session, sending the Dow temporarily below 11,000, but they bounced back from those lows late in the afternoon.

"I think this is a trader's market. It was a little bit sleepy this morning, but now stocks are going to come back the other way," said Rich Ilczyszyn, a market strategist with futures-broker Lind Waldock.

Ilczyszyn expects stocks to be stuck in a tight range for the last few days of the month, as traders look to close out their bets, with as much profit as possible.

A wave of downbeat news gave investors little to be thankful coming back from the Thanksgiving holiday weekend, as renewed fears about Europe's debt crisis, feuding South and North Korea, and a WikiLeaks release of controversial diplomatic files all weighed on markets.

"The situation in Korea is hot and fluid," economist Robert Brusca of FAO Economics said in a research note. "The WikiLeaks data is very damaging to the U.S. and to many of its important allies."

Meanwhile, Europe was also on investors' minds: On Sunday, European officials announced an €85 billion bailout for Ireland and its banks. They also detailed a new protocol for similar rescues of European nations in the future.

The announcement didn't come as much of a surprise, after various media outlets speculated about the size and timing of the bailout over the last few weeks. But it still managed to rattle investors as it thrust Europe's debt crisis back into the spotlight, said Michael Crowley, senior economist with the Bank of Ireland.

"The market is focusing on Portugal and Spain, and wondering whether problems could spread to those countries," Crowley said. "There's an indication that the markets are kind of jittery and concerned about what and who will be next."

Black Friday: Investors were looking at the sales results from the first days of the holiday shopping season, including Black Friday and Cyber Monday.

Early reports already show shoppers spent more on Friday, although sales may have been stronger online.

According to the National Retail Federation, 212 million shoppers visited stores and websites over Black Friday weekend, up from 195 million last year. Spending rose 6.4% over last year, to an average of $365.34 per shopper.

World markets: European stocks tumbled. Britain's FTSE 100 slipped 1.8%, the DAX in Germany dropped 1.9% and France's CAC 40 lost 1.8%.

Asian markets ended mixed. The Shanghai Composite lost 0.2%, while the Hang Seng in Hong Kong gained 1.3% and Japan's Nikkei rose 0.9%.

Economy: President Obama on Monday proposed a 2-year freeze of federal workers' wages. The freeze is a way to save $2 billion for the remainder of the fiscal year 2011, and $28 billion over the next 5 years.

"Getting this deficit under control is going to require some broad sacrifices, and that sacrifice must be shared by employees of the federal government," Obama said.

While no major economic reports were scheduled Monday, investors will take in data on housing, manufacturing and consumer confidence on Tuesday. On Friday, the government will issue its closely watched monthly jobs report.

Companies: FedEx (FDX, Fortune 500) bucked the S&P 500's downward trend, rising 4.7%, after analysts from Credit Suisse raised their rating and price target for the company.

Amazon (AMZN, Fortune 500) stock rose to an all-time high, boosted by indications of solid Cyber Monday sales. Its shares rose 1.3% in afternoon trading, after trading up more than 2% to $181.84 earlier in the session.

Meanwhile, 18 of the 30 Dow components posted losses Monday.

Kraft Foods (KFT, Fortune 500) said Monday it is seeking arbitration in its battle with Starbucks (SBUX, Fortune 500), as the coffee chain tries to end a deal under which Kraft distributes packaged Starbucks coffee to grocery stores. Kraft shares fell 0.4% and Starbucks lost 0.9%.

BP (BP) announced Sunday it would sell its interests in Pan American Energy to Bridas Corporation for $7.06 billion in cash. The move is part of BP's plan to sell $30 billion in assets by the end of 2011, in order to raise funds in the wake of the Gulf oil spill. BP shares fell 0.8%.

A Dutch court ordered U.S.-based Johnson & Johnson (JNJ, Fortune 500) to pay a $130 million fine to pharmaceutical maker Basilea for a licensing agreement breach, Basilea said in a release.

Meanwhile, the Food and Drug Administration posted a report on its website that cites a variety of problems with a McNeil manufacturing facility in Puerto Rico. McNeil is a subsidiary of Johnson & Johnson, and was the source of this year's Tylenol recalls. Shares of Johnson & Johnson fell 0.6%.

Currencies and commodities: The dollar strengthened against the euro, the British pound and the Japanese yen.

Oil for January delivery rose $1.97 to settle at $85.73 a barrel.

Gold futures for December delivery rose $3.60 to settle at $1,366 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 2.84% from 2.87% on Friday.