NEW YORK (AP) _ Stocks were solidly in positive territory in late afternoon after a gut-wrenching morning session which saw a 150-point swing in the Dow Jones industrials.

At 3 p.m. on Wall Street, the Dow Jones industrial average was up 22.30 at 7,983.14. The blue-chip index shot up nearly 80 points in early trading, then quickly plummetted to down 70 points, before bottoming out in late morning and then recouping its losses.

Declining issues still squeezed out advancers by 1,431 to 1,401 on the New York Stock Exchange, where volume was heavy at 488.93 million shares, up from Tuesday's pace of 403.28 million.

But broad-market indexes turned mostly positive. The Standard & Poor's 500 list was up 1.26 at 927.79, the NYSE composite index was down 0.15 at 480.91, and the Nasdaq composite index was up 5.06 at 1,581.30.

But the American Stock Exchange composite index was off 2.43 at 640.80.

Stock indexes recovered this afternoon along with bonds, which also swung widely this morning. At 3 p.m. the 30-year Treasury bond was up 1/2 point and yielding 6.63 percent, down from 6.67 percent late Tuesday. Bonds shot up more than a point this morning, slipped into negative territory and then climbed back, taking stocks with them.

Causing the dramatic swings were two separate government reports on the economy. The Labor Department said that prices paid to factories and to other producers inched down by 0.1 percentage point in July for the seventh straight month. Economists had predicted a rise by 0.1 percent.

That was good news because it showed that inflation, a big concern for bond investors, is under control.

The Commerce Department reported at the same time that retail sales rose 0.6 percent in July, the second consecutive increase. That was about in line with expectations. But Commerce revised a previously reported gain in retail sales for June to up .7 percent from up .5 percent.

"If these strong demand-side pressures continue, given the tight labor market we have and the rambunctiousness of labor in recent weeks,... you can't rule out a tightening in the third or fourth quarter,"

said Anthony Chan, chief economist at Banc One Investment Advisors in Columbus, Ohio.

Fed policy-makers meet next Tuesday to decide whether to increase short-term rates in a bid to cool inflation. Any suggestion this week that inflation is already under control could prevent such a tightening.

The markets will get perhaps a clearer look at inflation at the consumer level with the release on Thursday of the Labor Department's consumer price index for July.

Brian Belsky, managing director at Dain Bosworth Inc. in Minneapolis, said he expects today's volatility to continue throughout the week, and possibly even worsen on Thurday because of a triple expiration of options and futures contracts set for Friiday.

But, "the true direction will be decided tomorrow" with the release of more economic data, including the consumer price index for July. "We've set the table today for what will likely be an even more volatile session tomorrow."

Meanwhile, Micron Technology led the Big Board in volume and was down 6 5/16 at 43 7/16. Merrill Lynch & Co. and three other firms reduced their earnings expectations for the company.