Stocks bounce around, briefly taking Dow below 12,000 as investors worry about mortgages

NEW YORK — Wall Street gyrated and then steadied itself Wednesday, closing with a respectable advance although the Dow Jones industrials fell as much as 136 points and briefly dropped below the 12,000 mark before recovering.

Stocks bounced back and forth a day after concerns about faltering subprime mortgage lenders sparked a broad selloff. H&R Block Inc. had added to Wall Street's uneasiness by announcing after the closing bell Tuesday its fiscal third-quarter losses would rise because of a $29 million writedown at its mortgage arm.

The anxiety over mortgage lenders, particularly the subprime lenders that make loans to people with poor credit, pushed the Dow down by more than 240 points Tuesday, its second-biggest drop in nearly four years. Such concerns jostled stocks for much of Wednesday's session.

"I think the market got below 12,000 and buyers came in," said Todd Leone, managing director of equity trading at Cowen & Co.

According to preliminary calculations, the Dow Jones industrial average rose 57.44, or 0.48 percent, to 12,133.40.

The Dow first climbed above the 12,000 level on Oct. 18, after a meandering, 7 1/2 year journey from the 11,000 mark. During that time, Wall Street dealt with the dot-com bust, recession and the aftermath of the 2001 terror attacks. Tuesday's drop echoed a 416-point drop in the Dow seen two weeks ago that began in part after a nearly 9 percent drop in stocks in Shanghai and amid concerns about subprime mortgages.

Broader stock indicators also rose Wednesday. The Standard & Poor's 500 index advanced 9.22, or 0.67 percent, to 1,387.17, and the Nasdaq composite index rose 21.17, or 0.90 percent, to 2,371.74.

Bonds fell as stocks bandied about; the yield on the benchmark 10-year Treasury note rose to 4.52 percent from 4.50 percent late Tuesday. Gold prices fell.

Light sweet crude settled up 23 cents at $58.16 per barrel on the New York Mercantile Exchange.

"I think people right now don't know what to make of this market," said Larry Peruzzi, senior equity trader at The Boston Company Asset Management. "You look like a hero right now if you bought when the Dow was down 120 points and if you sold you look like a goat."

Peruzzi said stocks recovered after indexes neared technical levels and that the higher close in crude prices lent a boost to energy stocks. Exxon Mobil Inc. rose $1.11 to $71.02, while ConocoPhillips rose $1.32, or 2 percent, to $67.91.