NEW YORK — Investors acted Wednesday like they had overdone it a day earlier.
Wall Street snapped back from a steep sell-off with a rebound in the same financial stocks that were pummeled Tuesday. Upbeat comments from banks, stronger-than-expected results from IBM and hopes that Washington will offer more help to the economy powered a rally that recovered most of the previous session’s losses.
The Dow Jones industrials surged nearly 280 points, and all the major indexes rose more than 3.5 percent. Some bounce would have been expected after the Dow tumbled 332 points Tuesday, but forecasts from PNC Financial Services Group and Bank of New York Mellon eased concerns that the troubles at financial giants such as Citigroup were hitting all banks.
Many banks reversed double-digit drops from Tuesday with double-digit gains.
It’s too early to say whether Tuesday’s plunge and Wed nesday’s surge were overdone, said John Lynch, chief market analyst at Evergreen Investments in Charlotte, N.C. He contends the volatility will continue until investors gain more confidence. He predicts stocks will test the weakest levels of late November, when the Standard & Poor’s 500 index closed at an 11-year low.
“This is part of the painful bottoming process,” he said.
PNC, which acquired National City on Dec. 31, jumped 37 percent after saying it would turn a profit for 2008 and continue to pay its dividend. And Bank of New York Mellon rose 23 percent after reporting that it managed to eke out a profit for the fourth quarter.
Citigroup surged 31 percent after falling 20 percent Tuesday. Bank of America jumped 31 percent a day after falling 29 percent. Chief executive Ken Lewis’ report Wednesday that he bought 200,000 shares of common stock during the rout a day earlier encouraged investors.
And JPMorgan Chase rose 25 percent. Its CEO, Jamie Dimon, said he bought 500,000 shares of his bank’s stock Friday.
The Dow Jones industrial average rose 279.01, or 3.51 percent, to 8,228.10.
Broader stock indicators also gained. The Standard & Poor’s 500 index advanced 35.02, or 4.35 percent, to 840.24, and the Nasdaq composite index rose 66.21, or 4.60 percent, to 1,507.07.
Kim Caughey, equity-research analyst at Fort Pitt Capital Group, said the comments from PNC and other banks and results from IBM made clear that while it’s a difficult time for businesses, not all are struggling as much as some financial companies.
“It was a great reminder that businesses still have their lights on, their doors open, and that they’re making money,” she said.
