Stocks rallied strongly in the final hour Wednesday, logging a three-day gain, after hovering near the flat line for most of the session, but investors remained cautious ahead of Federal Reserve Chairman Ben Bernanke's Jackson Hole speech at the end of week.
The Dow Jones Industrial Average jumped 143.95 points, or 1.29 percent, to close at 11,320.71, in a volatile trading day. The blue-chip index crossed the flat line almost 15 times during the trading session.
BofA and Home Depot gained, while ExxonMobil was the only decliner on the Dow.
The S&P 500 rallied 15.25 points, or 1.31 percent, to end at 1,177.60. The Nasdaq rose 21.63 points, or 0.88 percent, to finish at 2,467.69.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, traded around 35.
All 10 S&P sectors finished higher, led by financials and utilities.
“Yesterday’s rally was about 30 to 40 percent short-covering and I would be very careful going into Friday,” Art Cashin, director of floor operations at UBS Financial Services told CNBC. “There could be a big surprise from Bernanke by saying nothing, and that could catch the markets off base.”
Many investors are awaiting Federal Reserve Chairman Ben Bernanke's speech on Friday at a banking conference in Jackson Hole, Wyoming, in hopes that he may announce some form of monetary policy to help support the U.S. economy.
Meanwhile, gold tumbled sharplyto settle below $1,760 an ounce, falling more than $100 as investors took profits after the metal's strong rally. (Read More: Is Gold Overbought?) Technical traders are watching $1,758 as the key support level for gold. Gold miners including GoldCorp and Barrick Gold declined.
“I would be looking to buy gold in this dip—You have to be a contrarian to make any money in this market,” Matt Cheslock, senior specialist at Cohen Capital Group told CNBC. “When things are bad, you have to be looking at the positive outlook and buy the dips—everyone’s so negative right now."