NEW YORK — Stocks posted their biggest jump in nearly two weeks Tuesday. Investors picked up cheaply priced stocks after fears that the U.S. would slip into a recession pounded the market over the past month.
The Dow Jones industrial average jumped 322 points, its best day since Aug. 11, when it gained 423. The Dow dipped about 60 points shortly after an earthquake hit the East Coast at 1:51 p.m. but recovered within 20 minutes and soared higher later in the afternoon.
James Paulsen, chief investment strategist at Wells Capital Management, said the beating that stocks have taken since late July made it look like investors were preparing for a recession. Investors questioned that bleak outlook Tuesday after a manufacturing survey from the Richmond, Va., branch of the Federal Reserve pointed to a slowdown, not a recession.
“And when people are preparing for a recession, slow growth is good right now,” Paulsen said.
The Dow, which tracks 30 huge U.S. companies, including IBM Corp. and General Electric Co., closed at 11,176.76, a gain of 3 percent. Indexes that track smaller stocks did even better, a sign that investors were more willing to take on risk.
The Standard & Poor’s 500 index rose 38.53 points, or 3.4 percent, to 1,162.35. The Nasdaq composite rose 100.68 points, or 4.3 percent, to 2,446.06. The Russell 2000 index of smaller U.S. companies gained 4.9 percent.
Exxon Mobil rose the most of the 30 stocks in the Dow, 4.9 percent. Chevron was also up more than 4 percent. Energy stocks got a push from a rise in the price of oil to $85.44 a barrel. The dollar fell against the euro and the Japanese yen as investors moved money into riskier assets.
Bank of America Corp. lost the most of any Dow stock, 1.9 percent. The stock has fallen 35 percent this month as investors become increasingly worried about the bank’s ability to raise capital and its liabilities related to subprime mortgages.
One measure of the market’s swings, the Chicago Board Options Exchange’s volatility index, is up 44 percent this month. That’s a sign investors are anticipating more wide swings in the S&P 500.
There’s still fear that the U.S. could slip into another recession. Investors will be watching Fed Chairman Ben Bernanke’s speech at the Fed’s annual retreat in Jackson Hole, Wyo., on Friday. It was at the same conference a year ago that Bernanke made the case for buying Treasury bonds to push interest rates lower and spur spending. That $600 billion bond-buying program was credited with giving stocks a lift, but it ended in June.
