Oil prices, meanwhile, recovered today as the U.S. dollar hit a new low against the euro. Oil futures traded above $95 a barrel.

Overseas, major Asian markets recovered from a weak start with investors in Japan leading an afternoon turnaround. Still, smaller Asian markets ended lower. European shares also rebounded from the last session's tumble, with buyers hunting for bargains and buying up shares in companies that have been hard hit in recent sessions.

In corporate news, Hewlett-Packard (NYSE: HPQ) warned investors that it does not expect its PC business to continue expanding as quickly as it has been. The company reported fiscal fourth quarter Monday after the close, easily beating estimates. HP's net income leaped 28% in the quarter to $2.16 billion, or 81 cents per share. Excluding one time charges, earnings were 86 cents per share, 4 cents higher than analysts' forecast. Sales jumped 15% to $28.29 billion, nearly $1 billion more than the $27.4 billion Wall Street was expecting. Still, the largest computer maker gave a brightened financial outlook and announced that the board authorized an additional $8 billion stock buybacks. HPQ shares are up 3.16% in premarket trading.

Reporting today are Freddie mac (NYSE: FRE), DR Horton (NYSE: DHI) and Target (NYSE: TGT), all of which could have an impact on the market as one gives indication on the mortgage market, the other on the housing market and the third on consumer spending, just as U.S. analysts say they expect a sales slowdown that may last through the holidays and into 2008.

[update: Freddie Mac posted a wider third quarter loss than was expected, hurt by a weak housing market and increased foreclosures.]