Unemployment, which jumped to a 14-year high of 6.5 percent in October, is projected to climb above 8 percent. Sohn said that will further crimp government tax revenues, which were down 7.5 percent in October compared with a year ago.
Wall Street was down sharply early in the day, but the markets later rebounded with a fury. The Dow fell as low as 7,965.42 and rose as high as 8,876.59. That's a trading range of 911 points. The Dow did not sink below its Oct. 10 trading low of 7,882.51.
The Dow's nearly 553-point gain was the third-largest single-session point gain on record, following the 889-point rise on Oct. 28 and the 936-point surge on Oct. 13.
The Standard & Poor's 500 index rose 58.99, or 6.92 percent, to 911.29, after dropping to 818.69.
The Nasdaq composite index rose 97.49, or 6.50 percent, to 1,596.70.
Some analysts said investors were positioning themselves ahead of a weekend meeting of the Group of 20 leaders in Washington. The meeting could bring decisions on mending the troubled global financial system. The so-called G-20 includes the United States, Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.
But uncertainty among retailers and others remains a concern on consumer spending as the holiday season approaches.
Wal-Mart Stores Inc. reported that profits were up 10 percent for the third quarter as its renewed focus on low prices attracted financially squeezed shoppers. But the country's biggest retailer trimmed its outlook because of the troubled global economy.
And retailer Kohl's Corp. said its third-quarter profit fell 17 percent as revenue dropped amid the consumer pullback, and the company lowered its outlook for what it said would be "the most challenging" holiday season in years.
The Treasury Department said that the $237.2 billion deficit for October, the highest ever recorded for a single month, reflected the $115 billion spent last month to purchase stock in eight of the country's biggest banks, the opening phase in the $700 billion rescue of the financial system that was passed by Congress on Oct. 3.
The Associated Press, Bloomberg News and the Los Angeles Times contributed to this article.
