NEW YORK (AP) — An early 200-point charge turned the Dow Jones industrial average positive for the year following a dismal stretch in May.
The Dow surged 212 points to 12,340 shortly in afternoon trading, That's an increase of 1.8 percent.
All 30 Dow stocks were higher, led by Bank of America, up 6 percent. The last time the Dow gained more than 200 points was March 13.
The big jump follows weeks of losses, including a 275-point plunge last Friday set off by a surprisingly weak reading on the U.S. job market. Hope that European officials would find ways to ease the region's debt crisis helped launch the rally Wednesday. Reuters reported that Germany and European Union officials were moving quickly to find a way to rescue Spain's hobbled banks.
A speech by a Federal Reserve official also led to speculation that the Federal Reserve may take more steps to bolster the economic recovery. Dennis Lockhart, president of the Fed's Atlanta regional bank, says the weak job growth over the past two months highlighted the "halting and tenuous" recovery. If the trend continues, "further monetary actions to support the recovery will certainly need to be considered," he said.
Federal Reserve Chairman Ben Bernanke will likely be asked about more actions to help the economy when he testifies before a congressional committee on Thursday.
Companies whose stocks have been clobbered the most over the past month had some of the strongest gains on Wednesday. Homebuilders rallied, helped by strong earnings from Hovnanian Enterprises and rising applications for new mortgages. Hovnanian's CEO said he sees signs that the housing industry may be entering the early stages of recovery. The Mortgage Bankers Association reported that applications for mortgages rose 1.3 percent last week, largely a result of more people trying to refinance their existing loans.
Hovnanian leapt 16 percent. PulteGroup Inc. surged 6percent and Lennar Corp. 3 percent.
The gains were broad. Just 19 of the companies in the S&P 500 dropped, and every industry group in the index rose, led by energy companies and financial firms. More than eight stocks rose for every one that fell on the New York Stock Exchange.
The dollar dipped and Treasury yields rose as investors moved money out of defensive investments. The yield on the benchmark rose to 1.63 percent from 1.57 percent late Tuesday.
Jim Russell, chief equity strategist at U.S. Bank Wealth Management in Cincinnati, Ohio, said it's natural for the market to have a strong day after an extended beat-down.
"In market language, it's called a technical bounce," he said. "It's consistent with a 'relief rally.' There's no bad news today, so the market goes up. Frankly, it's that simple."
U.S. markets followed major European indexes higher. Indexes rose 2.4 percent in the U.K. and France. Borrowing costs eased for Spain, another positive sign.
In other trading, the Standard & Poor's 500 rose 22 points to 1,308. The Nasdaq composite rose 54 points to 2,832.
Among stocks making big moves:
— Morgan Stanley jumped 5 percent amid reports that the Blackstone Group and other private equity firms may try to buy a stake in the bank's commodities business.
— UnitedHealth Group gained 2 percent after the health insurer said it will raise its quarterly dividend from 16 cents to 21 cents per share . The board also approved a plan to buy back stock.
— Tempur-Pedic International plunged 49 percent. The mattress maker said it expects quarterly profits to fall by half compared to last year. Tempur-Pedic blamed its competitors' aggressive marketing campaigns and promotions for hurting its sales.