Stocks closed off their best levels but were still sharply higher Wednesday in another volatile session after Greek, French and German leaders renewed their pledges to aid Greece, soothing investor fears over recent rumors of a default.
The Dow Jones Industrial Average jumped 140.88 points, or 1.27 percent, to end at 11,246.73, led by HomeDepot and Walt Disney .
The S&P 500 rallied 15.81 points, or 1.35 percent, to close at 1,188.68. The S&P broke through the 1,184-1,187 level and some traders are now watching the 1,198-1,204 as the next critical area. The Nasdaq gained 40.40 points, or 1.60 percent, to finish at 2,572.55.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, tumbled below 35.
All 10 key S&P sectors gained, led by industrials and consumer discretionary.
Stocks rallied after the Greek, French and German leaders all agreed that Greece will remain part of the EU, despite recent rumors of a default. Greece's George Papandreou, France's Nicolas Sarkozy and Germany's Angela Merkel also said that additional austerity measures will ensure the debt-ridden country achieves its fiscal targets.
“All eyes are still on Europe,” said Steve Neimeth, portfolio manager at SunAmerica Value Fund. “While there could be some near-term support for equity markets after the large selloff but ultimately, it doesn’t look like the market can carry through because Europe’s just kicking the can down the road.”
Stocks flip-flopped earlier following conflicting reports involving Austria’s stance on the European bailout fund. Austria's financial minister said the parliamentary committee only rejected some procedural matter and plans to address the EFSF expansion at a later time.
Meanwhile, Italy's lower house of parliament approved the confidence vote on the 54-billion euro austerity package.
