NEW YORK — Stock indexes closed with broad gains Wednesday as international leaders scramble to save a week-old plan to prevent a financial crisis in Europe. Strong corporate earnings and a hiring bump by private companies also helped send markets higher after a steep two-day drop.
The Dow Jones industrial average gained 178.08 points, 1.5 percent, to close at 11,836.04. The Dow lost 573 points the previous two days after the brokerage MF Global collapsed and Greece’s prime minister surprised markets and his own government with a call to put unpopular austerity measures to a public vote.
“It’s crazy how much the markets dropped in two days, considering that the data of the U.S. economy has actually looked pretty good,” said Barry Knapp, head of equity strategy at Barclay’s Capital. “It just shows you how fragile the investor psychology is with Greece hanging over everything.”
For much of the summer, investors were worried the U.S. economy was on the verge of another recession. But signs that consumers are continuing to spend and that manufacturing expanded in September have put many of those concerns to rest.
The Standard and Poor’s 500 rose 19.62 points, 1.6 percent, to 1,237.90. The Nasdaq composite gained 33.02, 1.3 percent, to 2,639.98.
The Federal Reserve said Wednesday that the economy was likely to expand modestly over the next two years. Fed Chairman Ben Bernanke cautioned that the pace of economic growth will likely be “frustratingly slow.”
The fear of a wider financial crisis eased somewhat as the euro rose against the dollar and Treasury prices slipped.
Should voters reject the Greek austerity plan, it could lead to a messy default on Greece’s debt.
