U.S. stocks rebounded Wednesday as financial stocks rebounded from steep losses in the prior session and Italian credit fears eased.
The Dow Jones industrial average rose 306.33 points — or 1.26 percent — to close at 24,667.78. Boeing, Chevron and Home Depot led the blue-chip stocks higher.
The S&P 500 added 1.27 percent to finish at 2,724.01 as a rise in U.S. interest rates ushered financial stocks higher and a rise in oil prices provided relief to a recently battered energy sector.
The Nasdaq composite rose nearly 0.9 percent amid gains in Facebook, Intel and Nvidia. Microsoft closed at an all-time high at $98.95 per share, north of its initial public offering price back in 1986.
The Russell 2000 added 1.5 percent to finish at 1,647.99, a record for the small-cap stock index.
The comeback in equities came as European markets stabilized on Wednesday. The Stoxx Europe 600 closed up 0.2 percent, while Italy's FTSE MIB — which fell 2.5 percent on Tuesday — rallied 2 percent.
The euro, meanwhile, recovered much of its previous losses with a 1.1 percent climb against the greenback to $1.166. Italian bond yields, which spiked Tuesday amid the political turbulence, fell across the board Wednesday after a regular bond auction proved better than feared.
Italian two-year bond yields fell to 1.72 percent from 2.1 percent, wiping out much of Tuesday's climb, while safe haven U.S. Treasury bond yields rose as investors grew more confident in the international debt market.
Though far from its highs above 3 percent in recent weeks, the yield on the benchmark 10-year Treasury note rose 7 basis points on Wednesday to 2.84 percent. The uptick in rates appeared to push the big banks upward, with Goldman Sachs, J.P. Morgan, Citigroup, Morgan Stanley, Bank of America and Wells Fargo all closing up more than 1 percent.
"I think there's certainly potential for problems [in Italy], but there's nothing necessarily new here ... the odds of Italy leaving the EU are very remote," said Bruce Bittles, chief investment strategist at Baird. "What we're seeing this year is a consolidation of what took place in 2017, when the market virtually went straight up."
Persistent uptrends and market calm "causes investors to get complacent," Bittles added. "This is a typical year in the market, especially ahead of midterms."
In the prior session, the Dow Jones industrial average fell 391.64 points — or 1.58 percent — after Italy's president over the weekend appointed former International Monetary Fund official Carlo Cottarelli as interim prime minister to help restore political order amid a swell in populist sentiment.