AFP - Wall Street snapped a five-day losing streak Wednesday, as an expected huge stimulus plan from China and new US efforts to ease home foreclosures helped mute the impact of weak economic data.
The Dow Jones Industrial Average rallied 149.82 points (2.23 percent) to close at 6,875.84, as the blue chips rose from 12-year lows.
The technology-dominated Nasdaq climbed 32.73 points (2.48 percent) to 1,353.74 and the Standard & Poor's 500 index jumped 16.54 points (2.38 percent) to 712.87.
Andy Brooks, equity strategist at T. Rowe Price, said the market was due for a rebound after the drubbing of the past few sessions.
"We're all breathing a sigh of relief. This market has been incredibly oversold and the news has just been horrific," he said.
Brooks said there was some encouragement from President Barack Obama administration's launch of a mortgage aid program to limit foreclosures, which could ease pressure on the economy.
"And everybody is expecting a huge stimulus package from the Chinese tonight," he added.
"You see materials, commodities and steel as the real big movers and that's because of the Chinese stimulus."
The market largely ignored a report from payrolls firm ADP showing the US private sector shed 697,000 jobs in February, more than expected, as employers slashed payrolls to cope with the shrinking economy.
Investors also looked past the Federal Reserve's Beige Book survey showing US economic activity "deteriorated further" through February, dampening prospects for a quick recovery from recession.
Analysts said investors were looking for signs of a "bottom" that would indicate an exhaustion of selling pressures.
Bob Dickey at RBC Wealth Management said the market may be there but it will take time to establish a bottom.
"We want to know what the bottom number is, but unfortunately, there isn’t one," he said. "The support needs to be created over a short or long period, but to expect it to be right at a particular number is a fallacy."
Some cited a JPMorgan Chase research report this week showing that 12-year lows are rare occurrences -- occurring in 1932 and 1974 -- that coincided with market bottoms.
Barry Ritholz at FusionIQ said establishing these lows "by no means is proof the bear market is over" but he said it "does present a real possibility of a strong market rally."
The market overcame a difficult session from General Electric, which has been hammered by fears of a credit downgrade and more losses at its GE Capital financial arm.
GE closed down 4.56 percent at 6.69 dollars, rebounding from its worst levels of the day, after the company dismissed speculation it would need fresh capital.
Among companies likely to benefit from any new Chinese economic stimulus, heavy equipment maker Caterpillar jumped 13.22 percent to 25.44 dollars and Alcoa leapt 12.84 percent to 6.24.
Among other big gainers, Chevron rose 2.68 percent to 59.28 dollars and Intel climbed 3.91 percent to 12.76 dollars.
Financial companies remained under pressure. Citigroup fell 7.38 percent to 1.13 dollars and Bank of America lost 1.37 percent to 3.59.
Bonds retreated. The yield on the 10-year US Treasury bond increased to 3.011 percent from 2.938 percent Tuesday and that on the 30-year bond climbled to 3.698 percent from 3.676 percent. Bond yields and prices move in opposite directions.
Other global stock markets rebounded sharply.
In Europe, London FTSE 100 index of leading shares closed up 3.81 percent to 3,645.87. In Frankfurt, the DAX index jumped 5.43 percent to 3,890.94 and in Paris the CAC 40 put on 4.74 percent to reach 2,676.68.
"Today saw the inevitable rebound after the vast losses of the past days but we’re certainly not out of the woods yet," IG Index analyst Tim Hughes said in London.
Chinese shares soared 6.12 percent, extending recent gains on hopes Beijing will unveil more measures to boost the economy which appears to be weathering the crisis better than most.