The Dow and the S&P 500 rose late today, rebounding from earlier losses of more than 2 per cent each, as investors bought back shares they had bet against and the banking sector gained.
The Nasdaq was down almost 1 percent after profit forecasts from Apple Inc and Motorola fanned fears about a recession and the tech outlook. Earlier, though, the Nasdaq had been down more than 3 percent.
Analysts said investors were forced to buy shares of companies they had made bets against. The Federal Reserve's emergency interest-rate cut yesterday also buoyed the banking sector. The S&P 500 financial index was up 5.4 per cent.
"It looks like it's short-covering and also all financials are really, really running right now," said Todd Clark, managing director of stock trading at Nollenberger Capital Partners in San Francisco.
The Dow Jones industrial average was up 72.83 points, or 0.61 percent, at 12,044.02. The Standard & Poor's 500 Index was up 3.33 points, or 0.25 per cent, at 1,313.83. But the Nasdaq Composite Index was down 19.64 points, or 0.86 per cent, at 2,272.63.
Bank of America Corp said this afternoon it has started a $6 billion public offering of securities, a day after it told Wall Street it planned to raise capital soon, following its report of a 95 per cent drop in quarterly profit. Shares of Bank of America shot up 6.3 per cent to $39.73.
The tech sector weighed heavily on the Nasdaq, with Apple's stock down 14 per cent at $134, while Motorola was down 17.6 per cent at $10.14.