Major US stock indexes rose more than 1 percent on Wednesday, after strong economic data calmed recession fears and helped halt a two-day sell-off.
The data, including a report that showed unexpected vigor in the job market, stoked expectations for corporate spending and sparked a robust recovery in technology shares. Bellwethers Microsoft Corp and Apple Inc drove the Nasdaq higher.
Shares of financial services companies headed higher after insurer American International Group Inc said its exposure to the housing and credit crisis was manageable. AIG shares jumped 4.9 percent.
"There's enough good things happening out there, things that are counter recessionary that people are digesting," said Ryan Crane, senior portfolio manager at Stephens Capital in Houston.
"The mind-set that we're not going to enter into any kind of a recession and that you've got some meaningful rate cuts in the near future, explain what's behind the move today," he said about expectations the Federal Reserve will cut interest rates next week.
The Dow Jones industrial average finished up 196.23 points, or 1.48 percent, at 13,444.96. The Standard & Poor's 500 Index closed up 22.22 points, or 1.52 percent, at 1,485.01. The Nasdaq Composite Index added 46.53 points, or 1.78 percent, to 2,666.36.
Optimism about the economy's health also buoyed shares of manufacturers and energy producers, as well as other stocks sensitive to the economic cycle.
Home builders, one of the market's most beaten-down sectors, were also a standout, with the Dow Jones Home construction index ending up 3.5 percent.
On the Nasdaq, shares of Apple, the maker of the iPhone, led advancers, with a gain of 3.2 percent to $185.50, while software maker Microsoft ended at $34.15, up 4.2 percent, the biggest one-day advance in more than a month.
Shares of chip maker Intel Corp gained 3.5 percent to $27.22. Analysts said prospects for big-cap technology were also underpinned by hopes of continued growth abroad.
AIG led financial shares on both the Dow and the S&P 500, with its shares rising $2.70 to $58.15 on the New York Stock Exchange. Shares of Citigroup Inc, the No. 1 US bank, advanced 3.5 percent to $33.69 on the NYSE.
The Dow's standouts included diversified manufacturer United Technology Corp, whose stock climbed 2.8 percent to $76.85. Shares of 3M Co, whose products include Post-it Notes and Scotch tape, rose 2.0 percent to $83.76.
On the energy front, shares of oil company Exxon Mobil Corp rose 2.0 percent to $89.92.
Among the home builders, shares of Beazer Homes USA Inc, the No. 7 US home builder, surged 6.6 percent to $8.38, while shares of Hovnanian Enterprises Inc, an upscale home builder, ended up 5.8 percent at $7.66.
Even so, jitters about the credit crisis lingered. Indexes cut gains briefly after ratings agency Moody's Investors Service said mortgage insurer MBIA Inc was at greater risk of capital shortfall than previously communicated.
Shares of MBIA finished down 16.0 percent at $27.42. Shares of PMI Group Inc, another mortgage insurer, declined 4.8 percent to $12.45.