NEW YORK — In a session that showed more indecision than conviction, the stock market rebounded Tuesday from the previous day’s massive decline. All the major indexes rose more than 3 percent.
The market was encouraged after General Electric Co. said it expects to pay a dividend despite projections that fourth-quarter results will near the low end of its previous guidance.
That raised some hopes that U.S. companies may fare better during the recession than the market has feared. Meanwhile, investors got an additional lift after the Federal Reserve said it will extend the life of key programs aimed at loosening the credit markets and restoring stability to the financial sector.
That wasn’t enough to completely calm investors who are weary after huge swings in the market the past few months — including the nearly 680-point slide in the Dow on Monday. The blue chips were up more than 260 points during the afternoon Tuesday, then dipped to a loss before swinging higher. Analysts said the volatility underscores how bear markets operate, and warned this kind of trading pattern isn’t expected to change soon.
“I don’t know where the bottom to all this is,” said Alexander Paris, economist and market analyst for Chicago-based Barrington Research. “In these kinds of markets, all you have to do is get enough confidence to hold your nose and ignore the bad news to send the market higher.”
Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research, said there still might be too much optimism in the market, considering the five straight days of advances before Monday’s drop. He believes there was too much excitement on the part of investors that a bottom might have formed, and that sets the market up for disappointments.
“There’s too much talk of valuations, people jumping in on the bullish side after a bounce,” he said.