Market Recap: Rumors of More Fed Easing Cause Markets to Surge

Markets finished well today:

▲ Dow: +2.37 percent

▲ Nasdaq: +2.40 percent

▲ S&P: +2.30 percent

Precious metals:

▲ Gold: up +0.04 percent to $1,619.98 an ounce

▲ Silver: up +2.85 percent to settle at $29.31

Commodities:

▲ Oil: +1.23 percent

Markets were up because:

The Dow Jones industrial average surged 286 points Wednesday, its best day this year.

The rally started early and gathered force in the afternoon. The charge turned the Dow positive for 2012 and erased the biggest loss of the year less than a week after it happened: the 275-point plunge set off by a dismal U.S. jobs report on Friday.

The Dow gained 2.4 percent to close at 12,414.79.

The big jump follows weeks of losses. Hope that European officials would find ways to ease the region's debt crisis helped launch the rally. News reports said Germany and European Union officials were considering a plan to lend money from the European bailout fund to help rescue Spain's hobbled banks.

A speech by a Federal Reserve official also added to speculation that the Fed may take more steps to bolster the U.S. economic recovery. Dennis Lockhart, president of the Fed's Atlanta regional bank, says 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 the best gains. Homebuilders rallied, helped by a strong earnings report 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.

The gains were spread across the market. Only 11 companies in the S&P 500 dropped, and every industry group in the index rose, led by energy and financial companies. Roughly seven stocks rose for every one that fell on the New York Stock Exchange.

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 29.63 points to 1,315.13. The Nasdaq composite rose 66.61 points to 2,844.72.

A Federal Reserve survey showed growth across the country. Hiring was steady, according to the Fed's "Beige Book." That's in marked contrast to the government's monthly jobs report, which said employers added the fewest jobs in a year last month.

The dollar dipped and Treasury yields rose as investors moved money out of defensive investments. The yield on the benchmark rose to 1.64 percent from 1.57 percent late Tuesday.

The Associated Press contributed to this report.