Wall Street makes gains in spite of low trading volumes

US stocks rebounded from two days of sharp losses yesterday after the Federal Reserve said it is prepared to do more for the economy if conditions warrant, helping to stanch the panicky reaction to Europe’s debt crisis.

Trading volume was light, however, possibly signaling that worries about Greece hold greater sway than the Fed at this time.

Federal Reserve chairman Ben Bernanke said the US central bank was closely monitoring developments in Europe and left open the possibility that the Fed could expand its holdings of mortgage debt if U.S. economic conditions worsened.

The energy and financial sectors were among the strongest performers after having led the market lower the previous two sessions. The S&P energy index rose 2.9 per cent while the financial index rose 2.8 per cent.

Some 7.5bn shares were traded on the NYSE, the Amex and Nasdaq, which was nearly 10 per cent below the 20-day moving average and well below Tuesday’s high volume selloff.

The Dow Jones industrial average rose 178.08 points, or 1.53 per cent, at 11,836.04. The S&P 500 Index gained 19.62 points, or 1.61 per cent, at 1,237.90. The Nasdaq Composite Index added 33.02 points, or 1.27 per cent, at 2,639.98. The VIX volatility gauge fell 5.8 per cent to 32.74.