YAHOO [BRIEFING.COM]: Whipsaw trade followed a flurry of headlines in the early going, but buyers soon surfaced to drive down volatility and give stocks their best gain in three weeks.

Sellers controlled the stock market in recent sessions and, as a result, sent the S&P 500 lower in five of the six sessions leading up to Friday for a cumulative loss of more than 4%. Such a slide prompted many participants to bet against the market with short positions.

Despite pessimistic trade ahead of Friday, stocks started the week's final session on a strong note. The mood was helped by news that second quarter GDP increased at an annualized rate of 1.6%. That was down from the preliminary rate of 2.4%, but it wasn't as poor as the 1.4% growth that had been widely expected. Participants also got a positive surprise with news that personal consumption for the second quarter was revised upward to reflect 2.0% growth after it had been expected to remain at 1.6%.

Early gains began to fade ahead of the final Consumer Sentiment Survey for August from the University of Michigan. The Survey was revised down slightly to 68.9 from 69.6 and was also below the reading of 70.0 that had been widely expected, but it was actually met with a bit of a positive response.

The market's attention was quickly diverted by a disappointing announcement from Intel (INTC 18.37, +0.19). The chip bellwether forecast third quarter revenue in the range $10.8 billion to $11.2 billion, but Wall Street had something closer to $11.5 billion in mind.

A knee-jerk response to Intel's announcement dropped the Dow 100 points into the red and put the S&P 500 back in touch with its August low of 1040. Support there helped stocks stage a sharp rebound that gained momentum by squeezing short sellers out of their positions.

Buyers were also encouraged by Fed Chairman Bernanke's comment that it is reasonable to expect some pickup in growth in 2011 and subsequent years, even though the recovery in output and employment has slowed. Bernanke also stated that policy options are available to provide additional stimulus, if needed.

Though the stock market attracted a broad bid, it initially had trouble pushing through the 1058 to 1060 zone. It eventually overcame resistance to settle at a session high just below 1065. Despite such a strong close, the S&P 500 still logged its second straight weekly loss of 0.7%. With that, the stock market is down more than 3% month-to-date.

Nonetheless, the improved tone among traders caused volatility to cool considerably. In fact, the Volatility Index dropped more than 10% in its sharpest single-session slide in more than two months.

Strong gains among stocks and a drop in volatility drove many out of Treasuries. Specifically, the benchmark 10-year Note gave up more than a point so that its yield moved back above 2.60% for the first time since Monday.

The dollar had a lackluster session. It finished flat, though the Japanese yen dove almost 1% amid news that Japan's central bank will hold an emergency meeting next week. Many presume that the meeting's purpose is to discuss the yen's appreciation - earlier this week the yen hit a 15-year high against the dollar.

Overall strength among commodities helped the CRB Commodity Index advance 1.2%. Not only was that its best single-session move of the month, but it also gave the CRB its first set of back-to-back gains for August.

As an aside, the bidding battle between Dell (DELL 11.89, +0.14) and Hewlett-Packard (HPQ 38.00, -0.22) for 3Par (PAR 32.46, +6.43) continues, though 3Par had already accepted an offer from Dell just yesterday. Dell upped its offer this morning to $27 per share of PAR in order to match a new offer from HP, but HP then raised its offer to $30 per share.

Overall strength among commodities helped the CRB Commodity Index advance 1.2%. Not only was that its best single-session move of the month, but it also gave the CRB its first set of back-to-back gains for August. Oil prices climbed 2.5% to settle at $75.19 per barrel. That move extended the commodity's upturn from the two-month low of $70.76 per barrel that it set earlier this week. Natural gas prices fell another 4.7% to close pit trade at $3.64 per MMBtu, which marks a new 11-month closing low for the energy component. Natural gas prices are now down more than 25% from their August high. Precious metals made modest gains. Specifically, gold and silver prices both advanced 0.4%. They settled at $1242.50 per ounce and $19.06 per ounce, respectively. Silver prices on the continuous future contract had been as high as $19.34 per ounce, which marked their best level in two months. Gold prices on the continuous contract set a near-two month high of $1243.30 per ounce in the prior session.

Advancing Sectors: Materials (+2.9%), Energy (+2.8%), Financials (+2.3%), Industrials (+2.1%), Utilities (+1.9%), Consumer Discretionary (+1.6%), Tech (+1.2%), Health Care (+1.0%), Telecom (+0.8%), Consumer Staples (+0.7%)
Declining Sectors: (None)DJ30 +164.84 NASDAQ +34.94 NQ100 +1.3% R2K +2.8% SP400 +2.2% SP500 +17.37 NASDAQ Adv/Vol/Dec 2165/2.16 bln/470 NYSE Adv/Vol/Dec 2608/1.09 bln/392