Stocks shot up 4 percent on Thursday as bargain-hungry investors overcame the recent wave of fear that drove selling over the last two weeks.
Thursday's rally marked the second bounce in a yo-yo week. After a sell-off that pushed the S&P 500 down as much as 17 percent since July 22, the market is showing some signs of regaining its footing.
It's a bungee cord market. We've fallen off of a small bridge, the bungee cord bounced us up, and oscillations will diminish, but we're still bouncing around, said Fred Dickson, chief market strategist at D.A. Davidson & Co., in Lake Oswego, Oregon.
Investors used results from Cisco
Financials outpaced other S&P 500 sectors after leading losses in the previous session. But bank borrowing costs were under some pressure overseas.
The CBOE Volatility Index <.VIX>, known as the VIX, shed 9.3 percent, though it remained near levels not seen in over a year. The day's trading volume on the New York Stock Exchange, NYSE Amex and Nasdaq, was 12.99 billion -- well above the year's estimated daily average of 7.8 billion.
The Dow Jones industrial average <.DJI> surged 423.37 points, or 3.95 percent, to 11,143.31. The Standard & Poor's 500 Index <.SPX> shot up 51.88 points, or 4.63 percent, to 1,172.64. The Nasdaq Composite Index <.IXIC> jumped 111.63 points, or 4.69 percent, at 2,492.68.
We're seeing a net flow of buy orders from retail investors here, so they're looking for bargains. I have not had anybody call me and say, 'Here's what I own. Tell me what I ought to sell,' and I've seen that in other high-volatility periods, Dickson said.
After the close, Nvidia Corp
SOME SIGNS POINT DOWN
While the major indexes showed strong gains on Thursday, the S&P 500 has fallen for 11 of the past 14 sessions.
Analysts said they still awaited a bottom in the correction that has taken the S&P 500 down 14 percent from its April 29 closing high.
The trend is downward now. We're having a big up day, but it's been very volatile. We've been up against resistance for a little while in the 1,170 level in the S&P 500 ... our next level I believe is 1,188, said Stephen J Guilfoyle, U.S. economist for Meridian Equity Partners and institutional sales trader on the NYSE floor.
One sign the market's downturn may not be over is a measure of stocks with 52-week highs versus 52-week lows, according to Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.
Some days need to pass before that indicator reverses, which would then suggest a bottom, he said.
Among the day's best sectors, the S&P financial index <.GSPF> jumped 6.3 percent, while the semiconductor index <.SOX> gained 5.2 percent. Another top advancer was the Dow Jones Transportation Average <.DJT>, up 4.3 percent.
Retailers also provided support after Kohl's Corp
Labor Department data showed new U.S. claims for unemployment benefits dropped to a four-month low last week, a dose of better news after a spate of soft economic data.
Cisco Systems Inc jumped 16 percent to $15.92 a day after it reported quarterly revenue and profits that topped scaled-back expectations.
Advancing stocks outnumbered declining ones on the NYSE by about 12 to 1 and on the Nasdaq by about five to one.
(Reporting by Caroline Valetkevitch; Additional reporting by Rodrigo Campos; Editing by Jan Paschal)