U.S. Stocks Slightly Up In Rebounding From Heavy Losses

NEW YORK (MarketWatch) -- U.S. stocks edged higher Wednesday, with the market trying to bounce back from its largest single-day plunge in nearly a year, after the government said productivity grew more than expected and as blue chip Walt Disney Co.'s earnings surpassed estimates.

The Dow Jones Industrial Average rose 38.8 points to 12,303.7, with 18 of its 30 components trading higher.

Leading the Dow's advancers were shares of Disney , up 5.7%. Late Tuesday, the media and entertainment giant reported a first-quarter profit that fell 27% from the year-ago period, results that topped expectations.

The Dow's decliners included General Motors Corp. , recently off 2.1%, after its downgrade to underperform by Bear Stearns, which also lowered its rating on Ford Motor Co. to peer perform, citing worries over consumers' ability to buy cars and trucks. Ford's shares also traded lower.

The S&P 500 gained 5.52 points to 1,342.16 and the Nasdaq Composite climbed 10 points to 2,319.57.

Volume on the New York Stock Exchange hit 254 million as advancing stocks outpaced declining issues 9 to 5. On the Nasdaq, 402 million shares changed hands, with advancers topping decliners 3 to 2.

Earlier, the Labor Department estimated productivity growth in the nonfarm business sector slowed to a 1.8% annual rate in the fourth quarter from 6% in the third. .

"This data suggest that, in the near term, falling productivity should not be a source of inflation concern for the Fed," said Drew Matus, economist at Lehman Brothers.

Stocks plunged on Tuesday, with the Dow industrials tumbling to their biggest drop in 11 months, after a key service-sector gauge contracted in January, another signal that a U.S. recession may be at hand.

In early action on the New York Mercantile Exchange, gold futures rose sharply to trade back above $900 an ounce, with gold for April delivery recently up $20.2 at $910.5 an ounce. .

And in the energy pits, crude-oil futures held steady near $88 a barrel, with crude for March delivery off 6 cents at $88.35 a barrel. .

Housing's unending toll

Toll Brothers Inc. drew scrutiny, saying it doesn't see an end to the U.S. housing market's woes. The luxury homebuilder reported home-construction revenue fell 22% in the first quarter. Its stock fell 2.6%. .

"Based on current traffic and deposits, we are not yet seeing much light at the end of the tunnel," said Robert Toll, chairman and chief executive.

Meanwhile, the Mortgage Bankers Association earlier reported applications for mortgages rose a seasonally adjusted 3% last week compared to the previous week. .

And on Tuesday, Richmond Federal Bank chief Jeffrey Lacker became the first Federal Reserve official to say publicly that the nation's economy is at risk of recession.

Lacker is due to make another speech Wednesday, as are Fed Governor Randall Kroszner and Philly Fed President Charles Plosser. Fed chief Ben Bernanke is due to hold a private meeting with Senate Banking Committee Chairman Chris Dodd, D.-Conn.

Besides Disney, other financial results included a drop in fourth-quarter net income for media and entertainment mainstay Time Warner Inc. , shares of which gained 3.1%. .

Overseas, concerns about the U.S. economy fueled heavy losses in Asia. .

In Europe, however, stocks battled back into the black. .

By Kate Gibson