US stocks jumped on Wednesday as signs of moves in Europe to rescue Spain's troubled banks sparked a rebound from recent selling and kept the broad S&P 500 index above key support.
After a drop of more than 6% by the S&P 500 in May and a break below the key 200-day moving average on Friday, the market was ripe for a rebound, analysts said.
"Capitulation occurred as the S&P hit its 200-day average, and now an oversold bounce is under way," said Chris Burba, a short-term market technician at Standard & Poor's in New York.
"The evidence was there that the market was at least getting close to the point of seller exhaustion. Once that happens, the pressure to cover short positions increases," said Burba, who noted that volume levels also increased on Friday.
All 10 S&P 500 sectors were higher on Wednesday, led by the energy, financial and technology sectors, all of which are tied to strong global demand.
European sources said German and European Union officials sought solutions for Spain's weakened banks, the latest worry in the fiscally troubled euro zone, although Madrid has not yet requested assistance and is resisting political conditions.
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Adding to the slightly more upbeat news on the economy, the Federal Reserve said in its Beige Book summary that US economic growth picked up over the two prior months and hiring showed signs of a modest increase.
The Dow Jones industrial average was up 222.81 points, or 1.84%, at 12,350.76. The Standard & Poor's 500 Index was up 23.51 points, or 1.83%, at 1,309.01. The Nasdaq Composite Index was up 57.22 points, or 2.06%, at 2,835.33.
Underscoring the difficulty in tackling the euro zone crisis, European Central Bank President Mario Draghi suggested further stimulus to tackle the euro zone's debt crisis would not necessarily be forthcoming. The ECB left interest rates unchanged following its meeting Wednesday.
The S&P 500 remains up 4% for the year so far, but is well off its highs of the year.
US non-farm productivity fell more than expected in the first quarter as companies gave more hours to employees but only modestly expanded output.
Facebook Inc is making it easier for advertisers to reach the growing ranks of users on smartphones and mobile devices, taking a significant step toward addressing one of investors' most pressing concerns and broadening its appeal to marketers. The stock rose 3.8% to $26.80.
On the down side, shares of Tempur-Pedic International Inc. fell 49% to $22.40 after revising its full year forecast.