U.S. stocks attempted a bounce for a second consecutive day on Thursday, amid continued signs of strength in the U.S. economy, following the recent plunge in global markets that sent the major averages into correction territory.
The major averages held 2 percent or higher in choppy trade leading into the close, after briefly more than halving gains to trade about 0.7 percent higher. The Nasdaq Composite swung out of correction and into positive territory for 2015.
The Dow Jones industrial average traded about 300 points higher, recovering from a dip, after earlier adding as much as 381 points in an attempt to rise out of correction mode.
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"No real catalysts. Lack of bids at this point," Peter Coleman, head of trading at Convergex, said of the late afternoon fade. He noted that the Dow briefly added more than 1,000 points over the last two trading sessions and people were taking profits and covering short positions.
"This isn't a one-day event," he said, noting that it will likely take two to three weeks for stocks to recover from the recent plunge.
"I think we're just getting some people hesitant to buy much further," said John Canally of LPL Financial.
The S&P 500 rose out of correction with Wednesday's stellar gains of about 4 percent. As of late-morning trade, no components of the index had set new 52-week highs or lows.
Crude oil is in focus after briefly topping $42 a barrel, with some gains attributed to short covering after lower-than-expected crude inventories. Futures for October delivery jumped $3.26, or 8.39 percent, to $41.87 a barrel on the New York Mercantile Exchange as of 12:22 p.m. Crude is on track for its biggest daily gain since June 29, 2012.
"That's a big positive. That breaks the downside momentum, too," said Bruce Bittles, chief investment strategist at R.W. Baird. "If oil kept crashing that would send a terrible message for the global economy."
Energy surged 4 percent to lead all 10 S&P 500 sectors higher, whileChevron jumped more than 5 percent to lead all blue chips higher.
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Apple jumped nearly 3 percent but remained in correction territory. The stock closed out of a bear market on Wednesday.
"Obviously the rally is continuing this morning. It's basically strength here after the good economic news we got," said Peter Cardillo, chief market economist at Rockwell Global Capital. He said stocks have likely hit a bottom. "The China concerns are about to subside as the market concentrates on the (U.S.) economic data."
The second estimate of second-quarter GDP came in at 3.7 percent, topping the first read of an annualized 2.3 percent.
"I thought it was a very pretty number, particularly the revisions," said Marie Schofield, chief economist and senior portfolio manager at Columbia Threadneedle Investments. "The principle areas where we saw those revisions (such as final sales) were important, gives the underlying trend in demand and growth."
However, she said with the increased trade deficit and buildup in inventories she is "not as encouraged by the second half as the second quarter."
The earliest Schofield expects a rate to come is in October, with a greater probability for January.
In a sign of continued improvement in the labor market, weekly jobless claims came in slightly lower than expected at 271,000, marking thefirst decline in five weeks.
July pending home sales rose 0.5 percent, holding steady from an upwardly revised June reading of a 0.5 percent increase.
Bond yields trimmed gains, with the 10-year at 2.20 percent and the 2-year at 0.70 percent. Earlier, the 10-year yield hit 2.2 percent, its highest level since Aug. 19.
The U.S. dollar traded mixed, weaker against emerging market currencies and stronger against the euro and yen. The euro traded near $1.12 and the yen held around 120.5 yen against the greenback.
Gold futures for December delivery fell $2.20 to $1,122.40 an ounce in midday trade.
"The combination of stronger economic data from both the U.S. and Europe and more stable China and EM, combined with a somewhat more dovish Fed postponing rate hikes is definitely good news for both the U.S. and Europe," said Ilya Feygin, senior strategist at WallachBeth Capital.
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