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Wall Street's best day in two weeks - and one of its best ever -
brought little real reason to celebrate.
      

Even the manic, final-hour of buying that sent the Dow Jones
industrials soaring almost 900 points Tuesday was overshadowed by
the reality that it could turn on investors in an instant.
      

The extraordinary, lurching volatility that has gripped Wall
Street since the financial meltdown began in mid-September meant
there were no guarantees the rally would hold, not even for a few
days.
      

Investors are expecting a cut in interest rates when the Federal
Reserve announces its decision Wednesday. But they're also staring
into an economic abyss, bracing for a recession of a depth no one
knows for sure.
      

Any other day like this - the Dow and the Standard and Poor's
500 both rose almost 11 percent - might have ended with boisterous
cheers and paper tossed into the air. On Tuesday, 4 p.m. came with
meager applause.
      

"I don't think it will be a sustained move," said Matt King,
chief investment officer at Bell Investment Advisors.
      
The Dow finished 889 points higher to close at 9,065. On Oct.
13, the Dow rose 936 points, its best ever; no other single-day
rally has come close in terms of points to what happened Tuesday.
      

Analysts ventured a number of explanations for the sudden rally
- including coming interest rate cuts, bargain hunting, a market
desperate to find a bottom and the expectation that banks, at the
urging of the White House, will quit hoarding money and start
making loans.
      

"There is nothing fundamental that came out today or yesterday
that would take it up or down. We're all groping for something
meaningful to talk about," said Bob Andres, chief investment
strategist at Portfolio Management Consultants. "The market is
exhausted from going down."
      

The mood on Main Street is decidedly more pessimistic, and new
data Tuesday showed Americans are more depressed than market
analysts had expected.
      

The Conference Board's consumer confidence index plunged to the
lowest level in its 41-year history in the wake of this month's
financial meltdown, the sharp drop in home prices and increasing
job losses.
      

The index fell to 38, down from a September reading of about 61
- the third-steepest monthly decline since the board started the
measure in 1967. Analysts, way off the mark, had expected 52.
      

"It's the worst consumer environment since the 1981-1982
recession," said Adam York, an economist at Wachovia Corp.
Americans believe "there's a very dire situation in the U.S.
economy right now, and they're not far from being right," he
added.
      

Financial market turmoil and falling housing prices have wiped
out trillions of dollars of household wealth in recent months. The
S&P 500 had fallen 27 percent in October, and 40 percent for the
year, before Tuesday's jump.
      

In addition, companies cut 760,000 jobs in the first nine months
this year, sending the unemployment rate to 6.1 percent last month.
Many economists expect layoffs to continue and the unemployment
rate to rise to 8 percent or higher in 2009.
      

After the last recession, in 2001, the unemployment rate rose as
high as 6.3 percent in June 2003.
      

On Tuesday, Whirlpool Corp. said it will cut 5,000 jobs. That's
on top of other recent layoffs of thousands of workers by Xerox
Corp., drugmaker Merck & Co. Inc. and financial services firm
National City Corp.
      

"The collapse in confidence is directly tied to perceptions
about economic conditions and that is likely to mean that
households will keep their wallets closed," said Joel Naroff, an
economist with Naroff Economic Advisors.
      

If they do, it'll happen at a bad time. The holiday season is
just weeks away, and it's expected to be anemic.
      

"I don't know how long this is going to last," said Johnny
Hunt, 50, a carpenter in Deltona, Fla., who says he is cutting back
on a lot of things. "So I got to save money. You've got to hold
onto what you do have."
      

S&P said in a report earlier this week that holiday retail sales
would probably fall 2 percent to $250 billion this year, "the most
difficult holiday season in memory for U.S. retailers."
      

Holiday sales have increased an average of 4.4 percent a year in
the past decade, the report said.
      

Meanwhile, the housing slump, which set off the mortgage crisis
that has consumed Wall Street for more than a year, shows no sign
of abating. A closely watched index of home prices fell Tuesday by
its steepest ever annual rate in August.
      

The Standard & Poor's/Case-Shiller 20-city housing index dropped
a record 16.6 percent from August last year, the largest drop since
its inception in 2000.
      

In addition, the Census Bureau reported that 2.8 percent of U.S.
homes - excluding rental properties - were vacant and for sale in
the third quarter, unchanged from the second quarter. That works
out to 2.22 million properties, the second-highest quarterly number
in records going back to 1956.
      

The first quarter clocked in at a 2.9 percent vacancy rate. In a
normal market, it's about 1.7 percent, said Patrick Newport, an
economist at IHS Global Insight. That means there's more than
800,000 excess vacant homes on the market.
      

Exacerbating the pricing environment is a rash of foreclosures,
especially in once-hot markets like California, Las Vegas, Florida
and Phoenix. Home prices are falling fastest there, according to
Case-Shiller - dropping as much as 30 percent in August.
      

To move foreclosed properties off their books, lenders are
sharply discounting prices, which is weighing down median prices.
      

On Thursday, the Commerce Department will provide its first
estimate of the economy's third quarter performance, and many
economists think the economy shrank. Economic contraction for the
third and fourth quarters consecutively would meet the classic
definition of recession.
      

Associated Press writers Tim Paradis in New York and Jeannine
Aversa in Washington contributed to this report.
      
      

Gallery

Dow soars 889 points

Consumer confidence plunges to lowest on record

Older Americans hit hard by economic turmoil

Senate candidates disagree on the economy

Wall Street's best day in two weeks - and one of its best ever -
brought little real reason to celebrate.

Wall Street jumps again, but no one is exhaling

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