Stocks rose on Wednesday, a day after the worst selloff in three months for Wall Street, as a report showed the U.S. private sector added more jobs than expected last month.
The market added to gains after The Wall Street Journal reported the U.S. Federal Reserve is considering a new type of mortgage and Treasury bond-buying program.
The news comes after Fed Chairman Ben Bernanke disappointed many in financial markets last week by giving no clear indication that he plans to spur faster growth by pushing for another round of asset purchases, or quantitative easing.
The market likes an easy Fed and the article is talking about how the Fed is discussing staying easy for as long as possible, said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.
Just when the Fed said they are going to keep short-term interest rates low until late 2014, this is another way for them to keep long-term interest rates low for as long as possible, he said.
Banking stocks - Tuesday's big losers - helped drive gains. The S&P financial sector index <.GSPF> rose 1.2 percent. Morgan Stanley
The PHLX housing sector index <.HGX> rose 2.2 percent, with Hovnanian Enterprises
Job creation by U.S. private employers picked up in February, according to payroll processor ADP's report, reinforcing hopes that Friday's government payrolls report would confirm a steadily healing labor market.
Bets on strength in the labor and housing markets have fueled the S&P 500's gain of 20 percent from the October closing low.
The Dow Jones industrial average <.DJI> gained 71.97 points, or 0.56 percent, to 12,831.12. The S&P 500 Index <.SPX> added 8.84 points, or 0.66 percent, to 1,352.20. The Nasdaq Composite <.IXIC> rose 27.26 points, or 0.94 percent, to 2,937.58.
Helping to reassure markets, major banks and pension funds threw their weight behind Greece's bond-swap offer to private creditors, increasing chances of a deal going through and the likelihood that a 130-billion-euro international bailout package will be secured.
Tuesday's tumble came on renewed concerns about Greece and the outlook for the global economy. It was one of the worst performances since stocks began rallying in October.
Anticipation of Apple's
Apple shares rose 0.7 percent to $534.13, pulling back slightly from an earlier gain of 1 percent to a session high of $537.78.
Shares of Freeport McMoRan Copper & Gold Inc
Investors kept an eye on oil prices after France voiced skepticism that a planned revival of talks between six world powers and Iran over its nuclear program would succeed.
Traders worry that an escalation of the crisis could bring war to the region, raise oil prices, and harm the global economy.
(Reporting by Rodrigo Campos; Editing by Jan Paschal)