Stocks soared Thursday, led by energy and industrials, as encouraging economic news out of the U.S. and China fueled recovery hopes.
The Dow Jones Industrial Average gained 273.28, or 2.8 percent, to close at 10,172.53, after a 40-point drop in the prior session.
Most of the 30 Dow components finished higher, led by Caterpillar , Chevron and Alcoa.
Cisco was the lone decliner, but was off just a penny.
The S&P 500gained 3 percentand the Nasdaq advanced 2.8 percent. The CBOE volatility index, widely considered the best gauge of fear in the market, dropped 10 percent and was around 30 at the closing bell.
The most often cited reason for today's rally was that the market is oversold. But the big question was, will it last?
“I think this rally will last,” said Mark McLain, managing director of Landenburg Thalmann. “In the next couple of weeks, you should see some meaningful volume come back to the markets.”
Stocks are now near a bottom, said U.S. equity strategist Thomas Lee of JPMorgan, speaking at the Reuters Investment Outlook Summit in New York. He projects that the S&P 500 will jump more than 10 percent to reach 1,200 by the end of July and hit 1,300 by the end of this year.
Oil prices topped $75 a barrel as the International Energy Agency said the spill could be a "game changer" for supply while increasing its estimate for demand this year.
BP rebounded more than 12 percentafter falling to a 13-year lowon Wednesday as investors speculated that the company may need to cut its dividend and worried about its financial stability. The stock's decline left the company's market cap at around $82 billion as of the close Wednesday, half of what it was just a few months ago.
Other energy giants such as ExxonMobil , Chevron and ConocoPhillips advanced 3 percent or more.
Just a handful of decliners on the board today, including Goldman Sachs and AutoZone .
Goldman Sachs broke through the key $135 level, hitting a 52-week low, amid heavy options activity, which likely means investors think the company will continue to suffer from headline risk. There's some buzz that the SEC is currently investigating another Goldman mortgage-related deal.
Walgreen shares eked out a gain, even after UBS cut the drugstore chain's rating to "neutral" from "buy."
In the day's economic news, the government said the number of U.S. workers filing new unemployment claims fell less than expected last week, while the international trade deficit widened slightly in April, pointing to a moderate economic recovery.
The national foreclosure rate continued to fall in Mayfrom the previous month, according to foreclosure database website RealtyTrac. Foreclosure activity dropped 3.27 percent in May from the previous month, and was up 0.45 percent from May 2009.
Treasurys trimmed their lossesafter a decent auction of 30-year bonds. The $13 billion sale fetched a high yield of 4.182 percent and the bid-to-cover ratio was 2.87.
Spain saw strong demand for its three-year auction, an encouraging sign for investors worried about the European debt crisis.
Meanwhile, the European Central Bank held its key interest rate at a record low of 1 percent. The Bank of England also kept interest rates steady.