Wall Street rose more than 2 percent on Wednesday and was set to record its best day in eight weeks as U.S. and Asian economic data soothed worries about a global economic slowdown.
Buyers found support after new data showed U.S. factory activity grew faster than forecast and China's manufacturing staged a moderate rebound, while Australia's economy grew at its fastest pace in three years.
The advance was broad-based, with about five stocks rising for every one that fell on the New York Stock Exchange and Nasdaq. Economically sensitive sectors like industrials and basic materials posted the biggest gains.
Traders said the lack of liquidity in the market helped exaggerate gains, as few sellers countered buyers who leapfrogged each other's bids.
There's a large bearish sentiment out there, and people are more concerned that the market moves sharply up, and that catches them off guard rather than there being tremendous pressure to move the market lower, said Joe Grecco, managing director at Meridian Equity Partners in New York.
There's only a few bullets left on the sell side. So here comes some positive data, and the market's going to rally.
The Dow Jones industrial average <.DJI> gained 233.18 points, or 2.33 percent, to 10,247.90. The Standard & Poor's 500 Index <.SPX> rose 28.40 points, or 2.71 percent, to 1,077.73. The Nasdaq Composite Index <.IXIC> added 56.50 points, or 2.67 percent, to 2,170.53.
Jumping nearly 3 percent, the S&P moved above its 14-day moving average for the first time since August 11. Only once in 2010 has the benchmark closed above that measure for just one day and dropped below it the next one -- and that could set the 1,068 level as a strong short-term resistance moving forward.
The Asian economic data boosted oil futures by nearly 3 percent to $73.94 a barrel and lifted the energy sector. The NYSE Arca Oil stock index <.XOI> rose 3.8 percent.
Metals prices advanced on the Chinese data, lifting copper to its highest level in more than four months.
Shares of aluminum producer Alcoa Inc
Investors shrugged off a report from ADP Employer Services showing private U.S. companies unexpectedly cut 10,000 jobs in August as well as government data indicating U.S. construction spending fell to its lowest rate in 10 years.
Shares of Burger King Holdings Inc
In the options market, puts outpaced calls in exchange-traded funds that track the S&P 500 index and the Nasdaq, suggesting investors are worried about the day's sharp rally.
This is typical of a big strong day like today. When markets go up, people put on hedges as they fear that they might see a pullback tomorrow, said Randy Frederick, director of trading and derivatives at the Schwab center for Financial Research in Austin, Texas.
Puts outpaced calls by a ratio of 1.48 in the S&P 500 ETF
(Additional reporting by Angela Moon; editing by Jeffrey Benkoe)