Talk of Spain solution boosts Wall Street

NEW YORK (Reuters) - Stocks rose on Wednesday as signs of urgent moves in Europe to rescue Spain's troubled banks sparked a rebound in beaten-down shares, pushing the broad S&P 500 index through a key support level.

European sources said Germany and European Union officials sought solutions for Spain's weakened banks, the latest worry in the fiscally troubled euro zone, although Madrid has not yet requested assistance and is resisting political conditions.

After a drop of more than 6 percent in the S&P 500 for May and a three-day slide to close out the prior week, the market was ripe for a rebound.

"Because of the nature of the selloff and how efficient it was, the bounce-back we are seeing over the last two days and today in particular really does make one think we've got the worst of the selloff behind us," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

"Keep in mind, although a rally of this type is welcome, nothing has significantly changed," he said.

Tuesday's gains left the index right at its 200-day moving average, and that support level acted as a springboard for investors to jump back into the market. All 10 S&P 500 sectors were higher on Wednesday, led by the energy, financial and technology sectors, all of which are tied to strong global demand.

Underscoring the difficulty in tackling the euro zone crisis, European Central Bank President Mario Draghi suggested further stimulus to tackle the euro zone's debt crisis would not necessarily be forthcoming. The ECB left interest rates unchanged following its meeting Wednesday.

The Dow Jones industrial average <.DJI> rose 204.84 points, or 1.69 percent, to 12,332.79. The S&P 500 Index <.SPX> gained 22.37 points, or 1.74 percent, to 1,307.87. The Nasdaq Composite <.IXIC> added 56.77 points, or 2.04 percent, to 2,834.88.

Investors will get a detailed look at the state of the economy from the Federal Reserve's Beige Book of regional economic conditions due at 2 p.m. EDT (1800 GMT). Fed Chairman Ben Bernanke will testify on the economy before a congressional committee on Thursday.

Non-farm productivity fell more than expected in the first quarter as companies gave more hours to employees but only modestly expanded output.

Facebook Inc is making it easier for advertisers to reach the growing ranks of users on smartphones and mobile devices, taking a significant step toward addressing one of investors' most pressing concerns and broadening its appeal to marketers. The stock rose 1.6 percent to $26.29.

Shares of Tempur-Pedic International Inc. fell 41 percent to $25.88 after revising its full year forecast. Fellow mattress makers also slumped, with Select Comfort Corp down 18.2 percent to $21.22 and Mattress Firm Holding Corp off 20.3 percent to $28.12.

(Reporting By Chuck Mikolajczak; Editing by Kenneth Barry)

WhatsAppFacebookTwitterLinkedinBeloudBluesky