Investors also appeared to be showing some restraint ahead of the Federal Reserve's interest rate policy decision and statement on Tuesday.

The central bank, faced with economic weakness and inflation risks, is widely expected to hold rates steady.

In addition to the Fed's statement, Tuesday also brings second-quarter corporate results from Cisco Systems (CSCO, Fortune 500), News Corp. (NWS, Fortune 500) and Procter & Gamble (PG, Fortune 500).

The Dow Jones industrial average (INDU) fell 0.37% and the broader Standard & Poor's 500 (SPX) index lost 0.9%. The tech-heavy Nasdaq composite (COMP) index shed 1.1%.

Bond prices fell, as did gold. The dollar was mixed against other currencies.

While the drop in crude and other commodities helped sentiment, "the bigger picture is what's going to come out of the Fed meeting," said Ryan Larson, senior equity trader at Voyageur Asset Management in Chicago.

The market will be focused on the central bank's statement "to see if the language suggests when a rate hike might take effect," he said.

Stocks slumped Friday, capping a choppy week, after the government said the nation's unemployment rate increased to a four-year high and General Motors (GM, Fortune 500) reported a huge quarterly loss, adding to the already bleak outlook for the auto industry.

Friday's jobs report was an important indication that the economy may be headed for a recession, if it isn't already in one, according to Hugh Johnson, chief market strategist at ThomasLloyd Global Asset Management.

"The employment numbers told us that the economy has been, at best soft, and most likely contracting since October," he said.

"There's really nothing in the numbers today that jolted the markets," Johnson added. "They told us what we already knew: the economy is doing poorly."

Oil: The price of crude fell as traders responded to reports that a tropical storm in the Gulf of Mexico is loosing steam.

Light, sweet crude for September delivery fell $3.69 to settle at $121.41 a barrel on the New York Mercantile Exchange, after being down as low as $119.50.

Crude futures were also being pressured by signs of softening demand, which outweighed concerns about possible supply disruptions due to a tense political situation with Iran.

Stocks often rally when oil prices fall. Many on Wall Street see cheaper crude as the key to bringing gas prices down, which could limit inflation and help speed economic recovery.

Economic news. The Commerce Department reported that personal spending and income edged higher in June. (Full story)

Individual income increased by 0.1% after a revised 1.8% jump in May, matching economists' expectations. The increase was due in part to the government's economic stimulus plan, which included billions of dollars in rebate checks sent to Americans in May and June.

Personal spending increased by 0.6%, topping the 0.5% increase that economists had expected. When adjusted for inflation, however, individual spending actually fell 0.2% following a 0.3% increase in May.

Separately, the government reported that factory orders jumped in June on higher oil prices and demand for military equipment.

The Commerce Department said orders rose 1.7% in June, the best showing since a 1.9% rise in December.

On the labor front, outplacement firm Challenger said the nation's employers announced 26% more planned job cuts in July when compared to June.

Financial firms. One of Europe's largest banks, HSBC Holdings (HBC), reported a sharp decline in quarterly profit due to "difficult financial markets." (Full story)

HSBC's biggest losses were in the North American market, where a subsidiary of the company that was heavily exposed to the subprime mortgage market.

Shares of the British bank fell 1.5%.

The news sent other banks with ties to the subprime market lower, including Wachovia (WB, Fortune 500) and Washington Mutual (WM, Fortune 500).

Other markets. In Asia, stocks finished mostly lower. European markets were mixed in afternoon trading.

Bond prices mostly fell. The benchmark 10-note shed 3/32 to 99 13/32, its yield held steady at 3.94%, unchanged from Friday.

The 30-year long bond fell 8/32 to 96 22/32, yielding 4.58%. The 2-year note, which is most sensitive to changes in interest rate policy, shed 1/32 to 100 14/32, with a yield of 2.51%.

Gold for December delivery fell $9.60 at $907.90 an ounce in New York.

The dollar was mixed against other currencies. The euro rose to buy $1.5589, up from $1.5541 on Friday. But the dollar gained against the Japanese yen, climbing to ¥108.19 from ¥107.75 last week.  

A little more than two hours before the market open, Nasdaq and S&P futures were lower and suggesting a negative open for stocks.

Stocks slipped Friday after the U.S. Labor Department reported a seventh straight month of job losses and investors mulled another plunge in monthly U.S. auto sales.

Economy: A slew of reports are on the economic calendar Monday, including the government's report on personal income and spending and a report on factory orders.

Economists polled by Briefing.com expect personal income fell 0.1%, and spending rose by 0.5% in June as Americans were squeezed by high prices. June factory orders are expected to rise 0.7%.

The economic data will be closely scrutinized as investors await the Federal Reserve's policy decision. The Fed, faced with economic weakness and inflation risks, is widely expected to hold rates steady Tuesday.

Also on tap are the Conference Board's employment trend report and a survey on job cuts from outplacement firm Challenger.

The two employment readings come on the heels of Friday's jobs report, which showed the U.S. economy lost 51,000 jobs in July while the jobless rate climbed to a four-year high of 5.7%.

Oil: The price of crude spiked hovered around $125 a barrel. Light, sweet crude for September delivery fell 6 cents to $125.04 a barrel in electronic trading

HSBC: Europe's largest bank, HSBC (HBC), said Monday that profits fell 29% through the first half of the year, the most since 2001, due to bad U.S. mortgages.

ArcelorMittal: Global steel producer ArcelorMittal (MT) said it plans to ride out U.S. economic worries by buying a steel mill in Mexico and a coke plant in Monessen, Pa.

Time Warner: The Wall Street Journal reported Sunday that media giant Time Warner (TWX, Fortune 500) could announce Wednesday that it has completed the accounting steps needed to split AOL's dial-up Internet-access business from its advertising and content business. The move could be a key step in the sale of one or both divisions, the Journal said. Time Warner is the parent company of CNNMoney.com.

Chrysler: Chrysler said on Sunday that its financial unit had renewed lines of credit totaling $24 billion. The privately-held automaker had originally sought $30 billion in credit.

The credit crunch is dealing a blow to automakers like Chrysler and rivals Ford (F, Fortune 500) and GM (GM, Fortune 500) at a time when they already are struggling with slumping sales. On Friday, Detroit's Big 3 automakers reported another sharp drop in U.S. sales in July.

Citigroup: New York state Attorney General Andrew Cuomo said Friday his office intends to file charges against Citigroup (C, Fortune 500) for the alleged fraudulent marketing and sale of troubled auction-rate securities to everyday investors.

Other markets: In Asia, stocks finished mostly lower as poor U.S. sales for Japanese automakers Toyota (TM) and Honda (HMC) weighed on Tokyo. European markets were mixed in morning trading. 

NEW YORK (CNNMoney.com) -- Wall Street's losses accelerated at the end of the day Thursday as investors fretted about the labor market and a reading on the economy's growth that was less positive than forecast.

Losses on the tech-heavy Nasdaq were limited by Motorola earnings that were better than expected and by promising biotech news.

The Dow Jones industrial average (INDU) ended the day down 206 points, or 1.8% lower, while the broader Standard & Poor's 500 index (SPX) finished 1.3% lower. The tech-heavy Nasdaq composite index (COMP) slid 0.2% after holding onto modest gains throughout the day.

One analyst said investors acted ahead of what is expected to be a grim July unemployment report on Friday.

"The surge in jobless claims gave investors a perfect excuse to take money off the table ahead of the major report of the month, which is employment," said Peter Cardillo, chief market economist at Avalon Partners.

The U.S. Department of Labor is expected to report that unemployment ticked up to 5.6% from 5.5% in the month prior, according to a consensus estimate of economists from Briefing.com. A job loss of 75,000 is forecast, which would mark the seventh straight month of declines.

A government report on Thursday that showed the economy grew at a slower-than-expected pace in the second quarter hurt market sentiment, as did a surge in initial jobless claims.

All three major indexes opened sharply lower before turning mixed as investors digested the news.

"The economic data that came in this morning was clearly disappointing," said Art Hogan, chief market strategist at Jefferies & Co.

"The main focus of market today is the GDP report that was weaker than expected," said Ed Clissold, senior global analyst with Ned Davis Research. "With the stimulus checks mostly going through the economy, what is it going to do once those dissipate?"

The market weakness came on the heels of a big two-day rally for stocks. The 30-component Dow gained "452 points in 2 days, so it is not surprising to get any sort of a pullback," said Hogan.

Market breadth was negative. On the New York Stock exchange, decliners beat advancers by nearly 2 to 1 on volume of 1.5 billion shares. On the Nasdaq, decliners just beat out advancers 15 to 13 on volume of 2.4 billion shares.

Economic reports: The Commerce Department reported that GDP grew at an annual rate of 1.9% in the three months ended June 30, up from a revised first-quarter growth rate of 0.9%. While that showed an increase, it was lower than the 2.3% forecast by economists. GDP for the fourth quarter of 2007 was revised down, to a decline of 0.2%. (Full story.)

The Labor Department said initial filings for unemployment benefits rose to a five-year high. Jobless claims increased by a seasonally adjusted 44,000 to 448,000 in the week ended July 26, much higher than the 395,000 that was expected in a consensus estimate of economists polled by Briefing.com. (Full story.)

The surge in jobless claims may have shocked the market even more than the slightly lower-than-expected GDP number, said one analyst.

"What caused the market to drop this morning was the jobless claims," said Harry Clark, founder and chief executive officer of Clark Capital Management Group. "There is always a knee-jerk reaction when you get news like that," he added.

Tech boost: The tech-heavy Nasdaq recouped earlier losses, boosted by better-than-expected results from tech-giant Motorola and news in the biotech sector.

Motorola (MOT, Fortune 500) swung to a profit, earning 2 cents a share, in the second quarter. That was much better than the 3-cents-per-share loss estimated by analysts. (Full story.) Shares ended the day almost 13% higher.

The strong results were enough to support a broader tech rally for most of the session.

"Nasdaq is so tech-laden and there are so many things that go into cell phones from chip sets to packaging," explained Jefferies' Hogan. "If you get better news out of Motorola, you get better news out of tech."

In the biotech sector, drug developer Bristol-Myers Squibb (BMY, Fortune 500) offered $4.5 billion for the remaining 83% stake it doesn't already own in its partner in making cancer drugs, ImClone Systems (IMCL). (Full story.) Bristol-Myers' stock, which trades on the New York Stock Exchange, edged down almost 2% by the end of the day, while Nasdaq component ImClone saw shares surge nearly 38% on the news.

"Motorola is helping the tech stocks and Bristol-Myers [buying ImClone] is helping the biotech, and those are both heavy parts of Nasdaq," said Clark.

The AMEX Biotech index, of which ImClone is a component, was up more than 4% Thursday afternoon.

Other Dow components that made significant market moves Thursday included Caterpillar (CAT, Fortune 500), which lost more than 3.5%; Walt Disney (DIS, Fortune 500), which finished for the day down more than 4%; and Boeing (BA, Fortune 500), which more than 4%.

Energy and Exxon Mobil: Before the opening bell, Dow component Exxon Mobil reported a record profit that, nonetheless, fell short of forecasts. That dampened the mood and dragged the Dow lower.

Exxon reported net income of $11.68 billion on revenue of $138 billion. Analysts were looking for a profit of $12.1 billion on sales of $144.4 billion. (Full story.) Exxon (XOM, Fortune 500)'s stock was down almost 5%.

Light, sweet crude oil for September delivery fell $2.69 to settle at $124.08 on the New York Mercantile Exchange. Oil prices surged more than $4 Wednesday, after having fallen sharply in recent weeks from a record high of $147.27 set earlier in the month. The Wednesday rally followed a government report showing that U.S. stockpiles of gasoline fell unexpectedly in the latest week.

At least one analyst suggested that the inverse relationship between oil prices and the stock market is beginning to weaken. Clark noted that the spike in oil prices on Wednesday did not hinder Wall Street - the Dow actually gained 186 points.

"We all realize we have to find more oil, more energy, more alternative sources of energy," said Clark. "Oil is starting to take more than a back seat than it has in the past."

Retail gas prices fell for the 14th day in a row, according to a daily survey by the motorist advocacy group AAA. The nationwide average price of regular unleaded gas fell 1.7 cents to $3.909 a gallon on Thursday. (Full story.)

Other markets: In currency trading, the dollar lost ground against both the 15-nation euro and the Japanese yen.

COMEX gold for December delivery rose $10.40 to $922.70.

Treasury prices rallied, sending the yield on the benchmark 10-year note lower to 3.95%. Bond prices and yields move in opposite directions.  

NEW YORK (CNNMoney.com) -- U.S. stocks slid at the open Thursday after the government reported lower-than-expected second-quarter growth, initial jobless claims surged more than expected, and Exxon Mobil announced sales and profit that missed forecasts.

The Dow Jones industrial average (INDU) was 0.7% lower, and as the broader Standard & Poor's 500 index (SPX) was 0.5% down. The tech-heavy Nasdaq composite index (COMP) started the day down 0.1%.

On Wednesday, the stock market posted its second straight day of strong gains on positive financial reports, rising consumer confidence and falling oil prices.

In the news on Thursday:

Gross domestic product. The economy grew at a faster pace in the second quarter than it did in the first quarter, but the growth was not as fast as economists were expecting. The Commerce Department reported that GDP grew at an annual rate of 1.9% in the three months that ended in June, up from a revised first-quarter growth rate of 0.9%. GDP for the fourth quarter of 2007 was revised lower, to a decline of 0.2%. (Full story.)

Jobless claims. A Department of Labor report showed that initial filings for state jobless benefits increased by a seasonally adjusted 44,000 to 448,000 in the week ended July 26, much higher than the 395,000 that was expected in a consensus estimate of economists polled by Briefing.com. (Full story.)

Exxon Mobil. The world's largest publicly traded oil company reported the largest quarterly profit in history, but the $11.68 billion net income missed analyst expectations. Analysts were looking for a profit of $12.1 billion. Exxon (XOM, Fortune 500) reported revenue of $138 billion, which missed analyst expectations of $144.4 billion in revenue. (Full story.)

Gas prices. Retail gas prices fell for the 14th day in a row, according to a daily survey by the motorist advocacy group AAA. The nationwide average price of regular unleaded gas fell 1.7 cents to $3.909 a gallon on Thursday. (Full story.)

Oil. Crude oil futures fell 32 cents to $126.45 at barrel, after surging more than $4 on Wednesday. Oil prices have fallen off sharply in recent weeks from a record high over $147 a barrel was set earlier in July. However, a government report released Wednesday showed that U.S. stockpiles of gasoline fell unexpectedly in the latest week.  

The Dow Jones industrial average (INDU) gained 186 points, rising 1.6%. That added onto the 266-point rally from Tuesday on the back of strong financial reports, rising consumer confidence and falling oil prices.

The broader Standard & Poor's 500 index (SPX) added 1.7%, but the tech-laden Nasdaq composite index (COMP) lagged behind, rising just 0.4%, due to several negative financial reports from the technology sector.

Rising oil prices put a damper on an early surge for much of the day, but stocks recovered by the session's end as investors focused on an unexpected gain in jobs and government help for the financial and housing sectors.

"That was a bit of a surprise, but there were lots of things going on that gave a bit of encouragement for the market to rally," said Peter Cardillo, chief market economist for Avalon Partners. "Government agencies are doing everything for credit markets to function and get the housing market back on track."

The Federal Reserve said Wednesday it is extending its emergency borrowing program to assist Wall Street banks with liquidity during the credit crisis. The plan was extended until Jan. 30. The U.S. central bank originally said the plan, which began in March, would end in mid-September. (Full story)

"The Fed extending credit is positive news," said Harry Clark, founder and chief executive of Clark Capital Management Group. "It's just going to take some time before the financials can find their footing."

Additionally, after initially threatening to veto the bill, President Bush on Wednesday signed a sweeping measure to offer affordable government-backed mortgages to homeowners at risk of foreclosure. The law will also bolster government-sponsored mortgage finance giants Fannie Mae and Freddie Mac with a temporary rescue plan and stricter regulation. Congress approved the bill last week. (Full story)

"It's going to be some time before we see a positive impact, but over the long term this bill is a good thing," said Bill Stone, chief market strategist with PNC Wealth Management. "The government is throwing everything they can at housing, since they know it is the center of the problem."

Stocks soared at both the open and the close of Wednesday's session after a strong jobs report gave investors hope of a brighter economic outlook.

The U.S. private sector added a seasonally adjusted 9,000 jobs during the month of July, according to Wednesday's ADP employment report. That was unexpected; economists surveyed by Briefing.com had forecast a 60,000-job decline. July marked a significant improvement over June's numbers, when the private sector shed a revised 77,000 jobs. (Full story)

The ADP payrolls survey came two days ahead of the more closely watched employment report from the U.S. Labor Department, which is due out Friday.

"The markets traded pretty well, because more jobs means less loan losses and more people paying their bills," said Stone. "With that said, we get the real number Friday - the ADP has been clocking in better than the government data and isn't a great predictor."

But by midday, blue chips pulled far back - though they still held onto their gains - as a government oil supply report showed a surprise decline in the nation's gasoline stockpile, which countered investor sentiment that U.S. demand was falling. Crude prices rose $4.58 to settle at $126.77 per barrel Wednesday. (Full story)

"Finally we have a day where oil is up but stocks aren't imploding," said Stone. "When oil gets a bounce, financials have gotten whacked, but the economy took the sting out of it."

Thursday on tap: Investors will see if the market can continue its winning streak Thursday, as a slew of economic reports are due. The government will report on real U.S. economic gross domestic product and the so-called GDP "chain deflator," which is a measure of consumer price changes.

The Labor Department will report on initial jobless claims before the opening bell Thursday, and the Chicago Purchasing Managers Association will release a key local manufacturing report as well.

After the market close, coffee chain Starbucks (SBUX, Fortune 500) reported a quarterly loss and revenue that missed Wall Street's estimates. Shares rose slightly in after-hours trading.

ExxonMobil (XOM, Fortune 500), MasterCard (MA) and Motorola (MOT, Fortune 500) are among the big names reporting quarterly financial results before the opening bell Thursday.

Financials rise again: Financial sector stocks responded positively to the Fannie and Freddie rescue bill as well as a government decision to extend a ban on naked short-selling of many bank stocks.

The U.S. Securities and Exchange Commission said late Tuesday that it will continue to ban investors through Aug. 12 from short-selling 19 mortgage finance companies without borrowing the stock. The ban includes 17 large investment banks as well as Fannie Mae and Freddie Mac. (Full story)

Fannie (FNM, Fortune 500) gained 5.3% and Freddie (FRE, Fortune 500) rose 3.7% Wednesday, but some banks fared even better.

For investment banks, Lehman Brothers (LEH, Fortune 500) led the pack with an 8% gain. Also, Morgan Stanley (MS, Fortune 500) rose 5.8%, Merrill Lynch (MER, Fortune 500) gained 2.5% and Goldman Sachs (GS, Fortune 500) also gained 2.5%.

Wachovia (WB, Fortune 500) led banks with an 8.8% gain. Washington Mutual (WM, Fortune 500) added 7%,Bank of America (BAC, Fortune 500) jumped 4.3%, Wells Fargo (WFC, Fortune 500) gained 2.4%, Citigroup (C, Fortune 500) rose 2% and JPMorgan Chase (JPM, Fortune 500) also rose 2% Wednesday.

The financial sector has seesawed in the past couple of weeks, as investors have balanced many banks' quarterly financial reports that came in better than expected with some dour economic news that has renewed fears that the credit crisis will not end anytime soon.

"Financials are going to be mixed for a while as they look to gain traction," said Clark. "The economy is still very fragile now."

Tech earnings: Chipmaker RF Micro Devices (RFMD) swung to a quarterly loss, but the results still beat Wall Street's expectations. The company reaffirmed its outlook, matching analysts' forecasts, and shares surged 16.8%.

But the NASDAQ was restrained by otherwise disappointing financial reports.

GPS navigation device maker Garmin (GRMN) reported quarterly earnings Wednesday that rose 20%, but the company offered tepid guidance. Shares plunged 21.9% Wednesday.

Video game maker Electronic Arts (ERTS) reported a narrower loss in the quarter Wednesday, but the results still failed to meet analysts' expectations. Shares sank 6.6%.

Poor financial results from Ultimate Software (ULTI), down 20.5% and Silicon Motion (SIMO), losing 38.2% also muted the tech sector's gains.

Other corporate news: Financial rating and analysis company Moody's (MCO) reported earnings that fell 48% from a year earlier, but results managed to beat analysts' expectations. Shares fell 2.5%.

Media company Comcast (CMCSA, Fortune 500) reported quarterly profit rose 8%, but missed Wall Street forecasts. Still, the company reaffirmed its guidance, and the stock rose 4.6%.

Drugmakers Wyeth and Elan announced late Tuesday that results of a study of experimental Alzheimer's Disease drug bapineuzumab were inconclusive and did not live up to expectations. Shares of Wyeth (WYE, Fortune 500) tumbled 11.9%, and Elan (ELN) plunged 41.8% Wednesday.

Market breadth was positive. On the New York Stock Exchange, advancers edged out decliners by a ratio of 2 to 1 on a volume of 1.5 billion shares. On the Nasdaq, losers beat winners on a 5-to-4 ratio on a volume of 2.3 billion shares.

Gas prices: The average price of gasoline fell 1.5 cents to $3.926 per gallon in the United States, declining for the 13th straight day, according to a daily survey from motorist advocacy group AAA. (Full story).

Other markets: In currency trading, the U.S. dollar wavered after an early rally, but showed slight gains against foreign currencies by the time the market closed. Tuesday, the dollar hit a one-month high versus the euro. (Full story)

COMEX gold for August delivery fell $13.60 to settle at $902.90 per ounce. Gold traded below the $900 level for much of the day Wednesday.

Treasury prices were mixed Wednesday, with the yield on the benchmark 10-year bond holding steady at 4.05% from late Tuesday. Bond prices and yields move in opposite directions. 

The Dow Jones industrial average (INDU) gained 266 points, rising 2.4% Tuesday. That reversed Wall Street's sharp decline from Monday, when the Dow tumbled 240 points on concerns about the continuing credit crisis and the battered U.S. economy.

The broader Standard & Poor's 500 index (SPX) added 2.3%, and the Nasdaq composite index (COMP) rallied 2.5% on better-than-expected earnings from drugmaker Amgen.

Shares advanced steadily throughout the day as consumer confidence got a surprise boost in July.

"Stocks kicked off because of consumer confidence," said Peter Cardillo, Avalon Partners chief market economist. "The mood of consumers may not be strengthening, but it's not dropping either."

The markets opened with a rapid rise after investment bank Merrill Lynch said late Monday it would take a $5.7 billion writedown and sell off $11.1 billion in mortgage securities in the current quarter. The brokerage also said it plans to raise $8.5 billion through the issuance of new stock. (Full story).

Oil prices also helped boost the markets, as crude sank to its lowest level in nearly three months.

Investors will see if the market can continue to rally Wednesday, as investors will get a glimpse at the monthly ADP employment report ahead of Friday's U.S. Labor Department report.

Economy: According to a Conference Board report released Tuesday, the research group's Consumer Confidence Index rose nearly a point in July, after falling in the previous six months, Analysts polled by Briefing.com anticipated the index to fall again by 0.4 point. The study did note, however, that overall confidence is still very weak. (Full story).

May home prices dropped a record 15.8% from a year ago, according to the S&P/Case-Shiller Home Price Index of 20 cities. It was the 22nd consecutive month of decline recorded by the index. (Full story).

Oil: Crude prices fell $2.54 to end Tuesday's session at $122.19 per barrel, the lowest settlement since May 6. Oil plummeted after OPEC President Chakib Khelil said oil was overpriced and could sink to $78 a barrel. Oil has fallen $25 since setting a record high of $147.27 on July 11. (Full story).

But if oil continues to sink, some analysts think that could spell trouble for stocks.

"If oil prices were to fall below $120, then that could add some worries," said Cardillo. "It would be a long-term positive, but if it's deflating from a fundamental viewpoint, it may be a sign that the global economy is weakening."

The government is due to release its oil inventory report after the opening bell on Wednesday. Crude stocks are expected to decline, while analysts forecast a slight rise in gasoline and distillate stockpiles.

Financials get a boost: The financial sector has seesawed in the past couple of weeks. After many banks' quarterly financial reports came in better than expected, financials showed strong gains for several days. The sector began to sink toward the end of last week, however, as some dour economic news renewed fears that the credit crisis will not end anytime soon.

But after Merrill reported its move to shed its risky assets late Monday, financials rebounded, as investors hoped banks are positioning themselves to get out of the mess that the mortgage meltdown left them.

"Investors are looking at the financial sector and saying this may be the last inning," said Cardillo. "The market seems to be suggesting a bottom."

Shares of Merrill (MER, Fortune 500) rose 8% on the news, but most other banks' stocks advanced by even more.

Wachovia (WB, Fortune 500) led banks with a 15.2% gain Tuesday. Bank of America (BAC, Fortune 500) added 14.8%, Washington Mutual (WM, Fortune 500) gained 12.4%, Wells Fargo (WFC, Fortune 500) rebounded 9.1% and JPMorgan Chase (JPM, Fortune 500) rose 8.2%.

Other investment banks fared well, too, with Goldman Sachs (GS, Fortune 500) rising 5.1%, Morgan Stanley (MS, Fortune 500) adding 4.4% and Lehman Brothers (LEH, Fortune 500) posting a 10.5% gain.

Government-backed mortgage finance giants Fannie Mae and Freddie Mac also rebounded Tuesday, after sharp losses Monday. Fannie (FNM, Fortune 500) added 12.5% and Freddie (FRE, Fortune 500) rose 9.1%.

Citigroup (C, Fortune 500) also managed a 5.9% gain, even after Deutsche Bank analyst Mike Mayo forecasted that the bank will take an added $8 billion in writedowns related to its collateralized debt obligations in its third quarter. (Full story).

Corporate news: Days after reporting a positive study of an experimental osteoporosis drug, Amgen (AMGN, Fortune 500) posted quarterly earnings late Monday that slipped 7.6% but still managed to beat analysts' forecasts. Shares rose 3% Tuesday.

U.S. Steel (X, Fortune 500) posted quarterly earnings that more than doubled from year-earlier levels. The results came in 45% higher than Wall Street's expectations, sending shares 14.1% higher.

British energy company BP (BP) reported a 28% rise in quarterly profit Tuesday, boosted by high crude oil prices. Its shares fell 2.5%, however. (Full story).

North America's largest refiner, Valero Energy (VLO, Fortune 500), reported quarterly earnings that fell 65% below year-ago levels on record oil prices and rising natural gas costs. Still, the results beat the estimates of Wall Street analysts, and shares rose 4.9%. (Full story).

Colgate Palmolive (CL, Fortune 500) reported an 18% increase in quarterly profit and boosted its outlook for 2009. The consumer products maker said cost reductions and price hikes, along with stronger sales in developing nations, made up for lagging U.S. sales. Shares surged 8.2%. (Full story).

Sony (SNE) said its quarterly profit fell by nearly 50%. The consumer electronics maker was hit by a strong yen and price competition in its electronics sector. Shares tanked 5.6%. (Full story).

Gas prices: The average price of gasoline fell 1.7 cents to $3.941 per gallon in the United States, declining for the 12th straight day, according to a daily survey from motorist advocacy group AAA. It was gasoline's lowest level since May 29. (Full story).

Other markets: In currency trading, the U.S. dollar spiked against global currencies, jumping to a one-month high Tuesday versus the euro. (Full story).

COMEX gold for August delivery fell $11.20 to settle at $916.50 per ounce, after fluctuating above and below the breakeven point for much of the day.

Treasury prices fell Tuesday, sending the yield on the benchmark 10-year note up to 4.05% from 4.01% late Monday. Bond prices and yields move in opposite directions.