NEW YORK – Stocks rose sharply Thursday, logging a third straight day of gains, as a $30 billion bailout for debt-ridden Brazil boosted banking giants like Citigroup and a benign picture of U.S. inflation lured more buyers into a market chock-full of bargains.
The Dow Jones industrial average jumped 255.87 points, or 3.03 percent, to 8,712.02, based on the latest available data. The tech-laden Nasdaq Composite Index gained 35.42 points, or 2.77 percent, to 1,316.32 after wobbling earlier. The broad Standard & Poor's 500 Index was up 28.67 points, or 3.27 percent, at 905.44.
Stocks zigzagged during early trading but then surged as investors worried they might miss a chance to buy stocks at lower prices after last month's rout. The market has gotten a boost this week from hopes the U.S. Federal Reserve may cut interest rates sometime this year, after a string of tepid economic data.
Results from network gear maker Cisco Systems earlier in the week also helped restore some optimism to the technology group.
"There's the thought process that the Fed is going to ease and that's a positive, then you had Cisco come through with OK earnings and Brazil has helped the whole financial group," said Alan Loewenstein, co-manager of the $400 million John Hancock Technology Fund. "At the close we've been seeing stocks get stronger instead of weaker. That signifies constant buying power."
The Dow, the S&P 500 and the Nasdaq have risen about 8.3 percent, 8.5 percent and 9.1 percent, respectively, over the last three days. Year-to-date, though, the Dow has dropped 13.1 percent, the S&P 500 has declined 21.1 percent and the Nasdaq has lost almost one-third of its value, off 32.5 percent.
"People are sensing we're close to a bottom after having had some sharp rallies," said Matt Holscher, head of Nasdaq trading for WR Hambrecht & Co. "The first phase was short-covering. Now people are dipping their toes in the water and thinking it might be a decent time to get involved."
Citigroup (C) and J.P. Morgan Chase & Co. (JPM) rose more than 7 percent as banks that had lent money to Brazil got a lift on news of the International Monetary Fund's bailout for South America's biggest economy. The lifeline helped ease fears Brazil might default on its $250 billion public debt.
Citigroup jumped 7.6 percent, or $2.38, to $33.90 and J.P. Morgan Chase & Co. rose 9.7 percent, or $2.33, to $26.37 as banks that had lent money to Brazil got a lift on news of the International Monetary Fund's bailout for South America's biggest economy.
The lifeline helped ease fears Brazil might default on its $250 billion public debt. Shares of Brazilian companies that trade in the United States soared. Brasil Telecom (BRP), for one, jumped $3.85, or 14.5 percent, to $30.40.
Cisco (CSCO) gained 21 cents, or $13.20. On Tuesday, Cisco posted higher quarterly earnings due to cost cuts and almost tripled its stock buyback program. The stock has risen for three-straight sessions.
Home improvement retail stocks were lower, though, after a profit warning from Best Buy Co. (BBY) raised worries consumer spending on durable goods was easing.
Consumer electronics retailer Best Buy lost $11.25, or 36 percent, to $19.55 and ranked as the biggest percentage loser on the New York Stock Exchange. The company slashed its quarterly profit outlook for the second time in two months, saying consumers have cut back on purchases of big-screen televisions.
Univision Communications Inc. (UVN) sank $1.93, or more than 8.8 percent, to $19.97. The largest Spanish-language media company in the United States posted lower quarterly earnings and warned of slower growth in the second half of the year.
Microsoft Corp. (MSFT) gained $1.82 to $48.91. The software leader agreed to submit to 20 years of U.S. government oversight of its online identity service to settle charges it misled consumers about security and privacy standards.
The latest economic data lifted some of the gloom over Wall Street. U.S. producer prices declined in July, the Labor Department said in a report that leaves Federal Reserve policymakers with few inflation worries when they meet next week. Hopes have mounted that the central bank will cut interest rates -- already at 40-year lows after 11 cuts last year -- to prop up the economy.
"The Fed has nothing to worry about on the inflation front; whether they will do anything is a question mark," said Paul Cherney, a market analyst at S&P Marketscope. "Markets right now are in a positive mode."
Fewer Americans than expected signed up for state unemployment benefits last week, the government said in another report Thursday that showed a slowly improving U.S. labor market.
Technicians say support -- where buyers are expected to swoop in -- is at 1,240 for the Nasdaq, 7,800 for the Dow and 840 for the S&P. Resistance -- the point where sellers are likely to emerge -- is at 1,350 for the Nasdaq, 8,900 for the Dow and 940 for the S&P, according to research firm Schaeffer's Investment Research.
The levels are key elements of technical analysis, which studies prices, volume and charts.
Advancing issues outnumbered decliners more than 2 to 1 on the New York Stock Exchange. Consolidated volume was moderate at 1.98 billion shares, but above Wednesday's 1.79 billion shares.
The Russell 2000 index, the barometer of smaller company stocks, rose 6.37, or 1.7 percent, to 389.84.
Overseas, Japan's Nikkei stock average finished Thursday down 0.4 percent, while stocks rose sharply in Europe. France's CAC-40 and Britain's FTSE 100 each rose 3.6 percent, and Germany's DAX index surged 6.2 percent.
Reuters and the Associated Press contributed to this report.