Stocks rebounded during the final hour of trading in a roller coaster ride on Wall Street Tuesday, following a report that EU finance ministers are examining possible ways to recapitalize banks and after Fed Chairman Ben Bernanke said he is prepared to help the economy.
The Dow Jones Industrial Average jumped 153.41 points, or 1.44 percent, to end at 10,808.71, led by DuPont and JPMorgan led the blue-chip gainers.
The S&P 500 also rallied 24.71 points, or 2.25 percent, to close at 1,123.94 after dipping in and out of its bear market territory, definied by a 20 percent decline from the highs in April.
And the tech-heavy Nasdaq soared 68.99 points, or 2.95 percent, to finish at 2,404.82.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, dropped near 40.
Most S&P sectors finished higher, propelled by financials and materials.
EU finance ministers are looking into ways to recapitalize banksafter agreeing that additional measures were needed to rescue the debt-ridden region's financial institutions, according to a report from the FT.
“This report reinforces that this market is still headline driven and fundamentals don’t even seem necessary,” said Todd Schoenberger, managing principal of The BlackBay Group. ”It’s all about headline news and there’s a game-changer headline every hour. The question is—is it even sustainable? There’s no way this [news] is going to propel stocks higher for the rest of the week.”
Meanwhile, Fed Chairman Ben Bernanke said the committee is prepared to provide a "broad based lending program" to help the ailing economy, adding that the Fed stands ready to ease monetary conditions further following its launch of a new stimulus measure in September.
Bernanke has been “very careful” not to disrupt the markets the way his speech did after the last FOMC meeting, according to Bruce McCain, chief investment strategist at Key Private Bank.
“What [Bernanke’s] focused on is to keep from panicking already panicked markets even more by being very reserved in his statements,” said McCain. “As we gradually work out way over time, hopefully [the Fed] will do something more effective.”