Stocks ended mostly higher after a late rally Tuesday as banks and materials rebounded. But tech stocks remained under pressure as investors worried about the sector's European exposure.
The Dow Jones Industrial Average rose 123.49, or 1.3 percent, to close at 9,939.98, after a see-saw session. That helped erase all of the 115-point drop from the previous session.
The S&P 500also gained more than 1 percent but the tech-heavy Nasdaqslipped. The CBOE volatility index, widely considered the best gauge of fear in the market, was around 33 at the closing bell.
“The markets are trying to stabilize after a fairly significant selloff,” said Alan Gayle, senior investment strategist for RidgeWorth Investments.
Gayle expects a sideways market through the summer and remains cautious on the market because of international uncertainties in Europe and China.
Offering some words of encouragement, Fed Chairman Ben Bernanke said he thinks the economy will avoid a double-dip recession but cautioned it won't be smooth sailing. The Fed chairman was speaking at the Woodrow Wilson International Center for Scholars, a nonpartisan research group.
"My best guess is we will have a continued recovery, but it won't feel terrific," Bernanke said, adding that economic growth won't be robust enough to drive down the unemployment rate, currently at 9.7 percent.
In Europe, finance ministers also attempted to restore market confidence by agreeing how to launch a massive anti-contagion program if necessary.
But it seems like each day brings a different country to worry about. Yesterday, it was Hungary. Today, it's Bulgaria. The EU has "some concerns" about Bulgaria, EU Economic Affairs Commissioner Olli Rehn said Tuesday.
The euro rose slightlybut was still near four-year lows against the dollar on Tuesday.
Investors seemed to be buying in to some beaten-down sectors of late, including financials and materials.
Citigroup and Bank of America advanced but Rochdale analyst Dick Bove cut his price targetand earnings forecast on JPMorgan , saying the brokerage is "facing challenges in its business model almost everywhere."
This came after Bove last week slashed his price target and forecastfor Goldman Sachs .