Stocks edged higher on Tuesday as investors bought shares beaten down in recent weeks despite uncertainties about euro zone sovereign debt and the economy.
Wall Street's fear gauge, the CBOE Volatility index <.VIX>, fell 2.3 percent but is up nearly 50 percent since the start of August, while the S&P 500 index has fallen 9 percent over that period.
The Nasdaq rose 1.1 percent, outperforming other major indexes for a second day, while the industrial sector led gainers on the S&P 500. The S&P industrial index <.GSPI> was up 1.6 percent.
Investors worried the euro zone debt crisis could tip the global economy into another recession.
Investors may have priced in a worst-case scenario, including a Greek debt default, said Bryant Evans, investment adviser and portfolio manager at Cozad Asset Management, in Champaign, Illinois.
They're now evaluating whether or not the recent decline has created some opportunity, said Evans, noting that he sees technology as a good bet.
The Dow Jones industrial average <.DJI> was up 58.69 points, or 0.53 percent, at 11,119.81. The Standard & Poor's 500 Index <.SPX> was up 11.37 points, or 0.98 percent, at 1,173.64. The Nasdaq Composite Index <.IXIC> was up 34.74 points, or 1.39 percent, at 2,529.83.
German Chancellor Angela Merkel and President Nicolas Sarkozy were determined to do what is necessary and were going to take action today, a French government source said, but Sarkozy's office denied a joint statement was planned.
Merkel sought to silence talk of an imminent Greek default, saying Europe was doing everything in its power to avoid a default.
Stocks started the day flat and some sectors still struggled to stay in positive territory, including more defensive sectors.
Among declining stocks, Best Buy
(Reporting by Caroline Valetkevitch, additional reporting by Ryan Vlastelica; Editing by Kenneth Barry)