Wall Street bounced more than two per cent on Wednesday, reversing three days of losses after Germany's top court smoothed the way for Berlin’s participation in bailouts that could ease Europe's debt crisis.
But investor caution that there remains a long road to recovery was underscored by light trading and continued high volatility as shown in the CBOE VIX volatility index.
In almost a mirror image of the previous session, financial stocks rebounded sharply, with the KBW Bank Index up nearly six per cent. Bank of America Corp jumped seven per cent, helped by a management shake-up.
European stocks rallied off a two-year low after the German court rejected lawsuits aimed at blocking the country from joining efforts to aid Greece and other nations. Germany’s DAX index leapt more than four per cent.
The Dow Jones industrial average gained 275.56 points, or 2.47 per cent, to 11,414.86. The Standard & Poor’s 500 Index rose 33.38 points, or 2.86 per cent, to 1,198.62. The Nasdaq Composite Index added 75.11 points, or 3.04 per cent, to 2,548.94.