Markets end day with gains after two-day plummet

Stock indexes rose Wednesday after a steep two-day drop as international leaders scrambled to save a week-old plan to prevent a financial crisis in Europe. Strong corporate earnings and a bump up in hiring by private companies also helped turn markets around.

The Dow Jones industrial average zigzagged up 178.1 points, or 1.5 percent, to close at 11,836. The Dow lost 573 points during 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."

The Standard & Poor's 500 closed up 19.6 points, or 1.6 percent, at 1,238. The Nasdaq composite gained 33, or 1.3 percent, to close at 2,640.

For much of the summer, investors worried that 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 Federal Reserve said Wednesday that the economy would likely to expand over the next two years. Fed Chairman Ben Bernanke cautioned that the pace of economic growth will likely be "frustratingly slow." The Fed said it would not take any more steps to help the economy for now, but it left open the possibility of more steps later.

The fear of a wider financial crisis eased somewhat Wednesday as the euro rose against the dollar and Treasury prices slipped. In the U.S., an increase in hiring by private companies helped lift stock prices.

Automatic Data Processing said private company payrolls rose by 110,000 in October, more than economists had expected. Most of the gains came from the service industry. ADP also revised its survey results for September higher. Investors see ADP's report as a precursor to the government's broader employment report, which is due out Friday.

Bank of America rose 4.5 percent, the largest gain among the 30 stocks in the Dow. MasterCard gained 6.8 percent after reporting that quarterly earnings soared 38 percent. The results beat analysts' expectations. Intel Corp. was the only Dow stock to drop, losing 0.5 percent.

Small stocks rose more than the overall market, a sign that investors were taking on more risk. The Russell 2000 index added 2.2 percent.

The yield on the 10-year Treasury note rose to 2.00 percent, up from 1.96 percent late Tuesday.

Among companies reporting quarterly earnings, EOG Resources Inc. rose 13 percent, the largest gain in the S&P 500 index. The oil and gas company reported third-quarter earnings that beat analysts' expectations after posting a loss a year ago.

JDS Uniphase Corp. jumped 9 percent, after the technology company's earnings surpassed estimates.