Fed Keeps Rally Alive

Updated from 4:11 p.m. EST

Stocks in the U.S. surged Wednesday and extended the previous session's rally as comments from a high-ranking Federal Reserve official suggested further rate cuts could be on the table.

The Dow Jones Industrial Average soared 331.01 points, or 2.55%, to 13,289.45. It was the fifth consecutive triple-digit move -- three up and two down -- on the Dow in as many sessions. Over the last two sessions, the Dow has jumped 563 points, but it still remains 4.6% lower for the month.

"These moves are just unbelievable," said Paul Mendelsohn, chief investment strategist with Windham Financial. "The volatility creates a hard market to deal with. It varies between which areas stand to benefit the most, but that flexibility may be the reason we could see a rally extend through the rest of the year."

Philip Roth, chief technical market analyst with Miller Tabak, argued that "a 100-point move isn't even 1% on the Dow anymore, and that's not unusual. It's sort of a fluky number to go by."

Indeed, the Dow also had a five-session span of triple-digit changes stretching from late July into early August.

All 30 of the Dow's components traded higher, led by advances of 4.3% or more in Citigroup (C Quote), AIG (AIG Quote), General Motors (GM Quote) and Intel (INTC Quote).

The S&P 500 was up 40.79 points, or 2.86%, at 1469.02, and the Nasdaq Composite jumped 82.11 points, or 3.18%, to 2662.91, supported by gains in Internet stocks Amazon.com (AMZN Quote), eBay (EBAY Quote) and Yahoo! (YHOO Quote).

Breadth was decidedly positive. On the New York Stock Exchange 4.50 billion shares changed hands, as advancers beat decliners by a 7-to-1 margin. Volume on the Nasdaq reached 2.46 billion shares, with winners topping losers nearly 4 to 1.