Stocks rose on Thursday after the European Central Bank launched fresh liquidity measures to help banks weather the euro zone's debt crisis, easing one of the major concerns overhanging markets.
Anxiety that the region's lingering debt crisis could lead to a bank collapse has pressured equities and helped push the S&P 500 briefly into bear market territory earlier this week.
The ECB, wary of the region's fiscal woes spiraling into a global crisis, said it will revive 12-month loan operations and purchases of covered bonds, while it kept key interest rates unchanged at 1.50 percent.
The ECB's buying of covered bonds is intended to boost confidence in stocks and other risky assets such as commodities and high-yielding bonds. A move in the same direction from the U.S. central bank last year triggered rallies in stocks and commodities.
We're popping back up again, based on the idea they will reach an agreement and rescue us, said Doug Roberts, chief investment strategist of Channel Capital Research.
He said the market has been swinging from euphoria to despair on headlines from Europe, and that translated to high volatility and an overall directionless market.
We get weeks of positive action and weeks of negative action, he said.
The S&P 500 is on track to post its third positive week in the last seven.
Shares of Morgan Stanley, which have been hurt recently by fears about its exposure to European banks, rose 3.2 percent to $14.94. The S&P financial index gained 1.9 percent and was the best-performing sector.
Thursday's advance marked the third up day for Wall Street with a more than 5 percent gain for the S&P 500 over the three days. Highlighting the recent volatility, it is also the fifth consecutive day of moves above 1 percent in the benchmark index.
The Dow Jones industrial average was up 119.62 points, or 1.09 percent, at 11,059.57. The S&P 500 was up 13.40 points, or 1.17 percent, at 1,157.43. The Nasdaq Composite was up 32.62 points, or 1.33 percent, at 2,493.13.
From a technical perspective, the S&P 500 remains in a downtrend. The range the index has been caught up in the past months is deteriorating, with lower lows followed by lower highs.
For the time being, we do remain in a fairly well-defined downtrend, said Richard Ross, global technical strategist at Auerbach Grayson in New York.
He said the fact that the benchmark has not traded above its 50-day moving average since late July is a sign that the market can still go lower.
If you did get a break back above 1,180, that would be a stronger signal that the bottoming process has begun, he said.
A rally in copper prices helped lift shares in the materials sector, though volumes were low and the metal is bouncing off a 14-month low hit earlier this week.
The S&P materials index rose 1.8 percent, with Dow component Alcoa up 5.9 percent at $9.92.
Apple Inc gave up its earlier gains and slipped 0.7 percent to $375.80 a day after co-founder Steve Jobs, the driving force behind the creation of the iPod, iPhone and iPad, died of pancreatic cancer at the age of 56.
New claims for unemployment benefits rose slightly less than expected last week, hinting at an improved labor market a day before the closely watched non-farm payrolls report.
(Reporting by Rodrigo Campos; Editing by Jan Paschal)