Stocks are ending sharply higher Wednesday on word of a possible Chinese economic stimulus package and an Obama administration plan to help struggling homeowners.
Buyers that rushed out of stocks for five straight sessions rushed back in Wednesday on hopes that government medicine will help the world's largest economies halt their slide.
Stocks rallied on word of a possible economic stimulus package in China and an Obama administration plan to help struggling U.S. homeowners. A slightly better-than-expected report on the services sector also helped. All the major indexes jumped more than 2 percent.
The advance followed five straight sessions of unrelenting selling that left major indexes at levels not seen in more than a decade.
"Virtually everyone was expecting some sort of a bounce, we just didn't know exactly when that would occur," said Randy Frederick, director of trading and derivatives at Charles Schwab. "You can't go down forever."
Wall Street followed the lead of overseas markets, which rallied on optimism over a possible Chinese economic stimulus plan. Prices for oil and other commodities also climbed as traders bet that government spending could boost demand.
Investors were encouraged by details of a government program designed to help as many as 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments.
The Institute for Supply Management, a trade group of purchasing executives, said its services index fell to 41.6 last month from 42.9 in January, slightly above Wall Street's estimate of 41. Any reading above 50 signals growth.
According to preliminary calculations, the Dow Jones industrial average rose 149.82, or 2.2 percent, to 6,875.84. The Standard & Poor's 500 index added 16.54, or 2.4 percent, to 712.87, while the Nasdaq composite index gained 32.73, or 2.5 percent, to 1,353.74.
The Russell 2000 index of smaller companies rose 10.29, or 2.9 percent, to 371.30.
Four stocks rose for every one that fell on the New York Stock Exchange, where volume came to a moderate 1.8 billion shares.