Stocks rebounded in volatile trading Wednesday to close near session highs as investors were encouraged over several reports that pointed to a progress in the European debt talks.
The Dow Jones Industrial Average rallied 162.42 points, or 1.39 percent, to finish at 11,869.04, led by Boeing and Hewlett-Packard .
The S&P 500 advanced 12.95 points, or 1.05 percent, to close at 1,242. The Nasdaq gained 12.25 points, or 0.46 percent, to end at 2,650.67.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished below 30.
Most S&P sectors ended in the black, led by energy and financials.
The euro zone is planning on leveraging its EFSF bailout fund by 4 times to 1 trillion euros, according to EU sources.
Meanwhile, China may consider investing in Europe's bailout fund, according to a report, citing two senior EU diplomats. The diplomats did not provide details to the scale of China's involvement, but EFSF chief executive Klaus Regling is planning on leaving for Beijing on Thursday following the summit, according to the sources.
In addition, French President Nicolas Sarkozy will speak to Chinese President Hu Jintao Thursday about getting China involved with the new EFSF, according to Reuters.
“Again, this is rumor central and any headline can move stocks,” said Joe Saluzzi, co-manager of trading at Themis Trading.
Investors breathed a sigh of relief following news that Germany's parliament approved a motion to strengthen the EFSF via leveraging. The vote provides German Chancellor Angela Merkel with the mandate she needs to negotiate at the summit.
However, talks over a haircut on Greece’s debtcontinue to be the main stumbling block in forging a resolution package as details of the Greek bond exchange appear unlikely to be finalized until a later meeting of EU finance ministers.
The next meetings are not officially scheduled to take place until the 7th and 8th of Nov., but it would be possible to schedule an earlier meeting if necessary.
“Everyone on the floor is nervous Nelly because this rally we’ve had over the last few weeks was based on a stack of toothpicks—very fragile and without a lot of conviction,” said Todd Schoenberger, managing principal at The BlackBay Group.
Among earnings, Boeing rallied after the Dow component posted earnings that beat expectationsand also raised its full-year outlook.
Ford Motors posted results that exceeded Wall Street estimates, but gave no indication as to whether it would resume paying out a dividend.
And Sprint declined after the wireless carrier posted a smaller quarterly loss and said revenue rose. However, the firm said it lost more subscribers than analysts expected.
Meanwhile, ConocoPhillips finished higher even after the oil giant
Amazon plunged after the online retail giant posted a far weaker than expected outlookfor the holiday season. In addition, at least eight brokerages slashed their price targets on the firm.
First Solar cut its profit forecast and added it would slow spending as the industry struggles to adjust to the steep decline in the price of solar panels. In addition, at least four brokerages reduced their price targets on the firm. However, shares of the solar company still soared, rebounding from the previous session's selloff after the firm ousted CEO Rob Gillette.
Visa is slated to post earnings after-the-bell tonight.
In technology news, Research In Motion slumped after the smartphone maker said it will not upgrade the software for its PlayBook until February and the tablet won't feature the BlackBerry Messenger application even after the change.
Finnish cellphone maker Nokia unveiled its first Windows phonesthe Lumia 800 and Lumia 710 since striking a deal with Microsoft .
IBM edged higher, following news that global sales chief Virginia Rometty will take over as CEO from Sam Palmisano in January.
Treasury prices pared their lossesafter the government auctioned $35 billion in 5-year notes at a high yield of 1.055 percent and bid-to-cover of 2.90.
On the economic front, demand for durable goods gained in September, its largest increase in six months, according to the Commerce Department.
And new home sales grew at their fastest pace in almost five months, according to the Commerce Department.
Weekly mortgage applications gained last week, recovering some of the losses from the previous week as demand for purchases and refinancing picked up, according to the Mortgage Bankers Association.
—Follow JeeYeon Park on Twitter: twitter.com/JeeYeonParkCNBC—
On Tap This Week:
THURSDAY: GDP, jobless claims, pending home sales index, 7-yr note auction, Motorola begins pre-orders for Droid Razr on Verizon; Earnings from AstraZeneca, Bristol-Myers, ExxonMobil, P&G, Royal Dutch Shell, Aetna, Motorola Solutions, Time Warner Cable, AMD, Motorola Mobility, Gilead Sciences, Baidu and Electronic Arts
FRIDAY: Personal income & outlays, employment cost index, consumer sentiment; Earnings from Chevron and Merck
More From CNBC.com: