business

NEW YORK  — Wall Street withstood another stream of bad economic readings Wednesday, closing sharply higher after investors shuttled between pessimism about the recession and hopes that the nation might start seeing relief soon. The major indexes saw big swings throughout the day, but all closed up more than 2 percent, giving the market its second straight advance.

The day's downbeat news included a drop in productivity, a pullback in the services sector and the Federal Reserve's finding of worsening economic conditions across the country. Investors were initially disheartened by each piece of news but soon shook off their disappointment — until the next dismal report was issued.

Analysts largely believe that much of the bad news is already priced into the market, and they again said stocks remain in a bottoming process after the huge declines of the past two months.

"The market is beginning to look forward, and a lot of the selling pressure appears to be abating," said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners. "Perhaps some of the hedge funds are becoming less aggressive in selling, and investors are starting to look at the future."

The Fed's report, known as the beige book, said the country's economic picture has deteriorated, with Americans hunkered down heading into the holidays. The report suggests the economy was sinking deeper into recession.

Earlier, the Institute for Supply Management, a trade group of purchasing executives, said the nation's services sector contracted dramatically in November as slower spending hurt insurers, retailers and hotels. And the Labor Department reported that productivity growth slowed in the third quarter.

The market, which also fluctuated sharply on Tuesday before closing higher, has now advanced in seven of the last eight sessions. The winning streak was broken only by Monday's big decline that took the Dow Jones industrials down nearly 680 points; even with that plunge, the blue chips still have an advance of nearly 1,040 over the eight-day stretch.

Still, stocks are expected to see more volatility as the week progresses, especially with November retail sales figures being released Thursday and the government's employment report due Friday. Wall Street has been locked for months in a pattern of surging higher only to fall sharply on negative news about the economy and the financial services sector.

The Dow rose 172.60, or 2.05 percent, to 8,591.69. The blue chip index has gained more than 442 points in the past two session, wiping out more than half of Monday's slide.

Broader indexes also closed higher. The Standard & Poor's 500 index rose 21.93, or 2.58 percent, to 870.74, while the Nasdaq composite index rose 42.58, or 2.94 percent, to 1,492.38.

The Russell 2000 index of smaller companies rose 11.94, or 2.70 percent, to 453.76.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 6.01 billion shares, up from 5.79 billion on Tuesday.

While the market's recent advances are no doubt encouraging, analysts largely expect the turbulence to continue well into the future as Wall Street works to emerge from a bear market.

"I think these pops are not fundamentally driven," said Jeff Buetow, senior portfolio manager at Portfolio Management Consultants. "I think it's wishful thinking. I don't see any sustainable up move in the equity markets."

And, there are certainly headwinds confronting investors this week. Of particular concern is the nation's unemployment rate, which soared to a 14-year high of 6.5 percent in October as another 240,000 jobs were cut. For November, job losses are expected to climb to 320,000 and the unemployment rate is expected to hit 6.8 percent when the Labor Department reports figures Friday, according to economists surveyed by Thomson Reuters.

On Wednesday, the Institute for Supply Management said its services sector index fell to 37.3 in November from 44.4 in October. The reading was significantly lower than the 42 the market expected.

Meanwhile, the Labor Department reported that productivity rose at an annual rate of 1.3 percent in the July-September quarter. That's down from the 3.6 percent growth rate in the second quarter, but slightly higher than the 1.1 percent initially reported a month ago and better than the 0.9 percent rise economists expected.

Ahead of retailers' November sales reports Thursday, there was some sign of relief about a stronger-than-expected bump in online sales Monday.