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S&P escapes bear market with late-afternoon rally

NEW YORK — A late-afternoon surge capped another wild day Tuesday on Wall Street, bringing the S&P 500 back from the brink of entering a bear market. Stocks jumped on reports that European officials were working on a joint effort to prop up the region's struggling banks.

The Dow Jones Industrial Average was down for the whole day before turning positive just 10 minutes before the closing bell.

Indexes opened sharply lower as traders worried that Greece could be edging closer to default. Stocks pared their losses at midday after Federal Reserve Chairman Ben Bernanke told a Congressional panel that the central bank could take more steps to stimulate the economy, then slumped again in the afternoon.

At 3:25 p.m., the market began rising quickly after several news outlets reported that European financial ministers were working on a way to coordinate their efforts to support European banks, as they did during the financial crisis in 2008. Worries that U.S. and European banks could get hammered by a Greek default have been a major concern among investors.

The Dow closed with a gain of 153.41, or 1.4 percent, to 10,808.71.

The Standard and Poor's 500 rose 24.72, or 2.2 percent, to 1,123.95. It had been down as many as 24 points in morning trading, 20 percent below its April peak. Had the index closed with a decline of that size, it would have met the typical definition of a bear market.

The technology-focused Nasdaq composite rose 68.99 points, or 3 percent, to finish at 2,404.82.

S&P escapes bear market with late-afternoon rally 09/16/10 [Last modified: Tuesday, October 4, 2011 7:49pm]

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