Bulls Make Their Comeback

Updated from 4:17 p.m. EST

Wall Street was in full rally mode Tuesday as a rebound in overseas bourses emboldened buyers, giving the major U.S. indices their biggest single-day gains so far this year.

The Dow Jones Industrial Average jumped 157.18 points, or 1.3%, to 12,207.59. The S&P 500 added 21.29 points, or 1.55%, to 1395.41.

The Nasdaq Composite was the strongest gainer, rising 44.46 points, or 1.9%, to 2385.14.

Nearly every Dow component finished in positive territory, led by gains of 2.7% in Citigroup (C Quote), Altria (MO Quote) and American Express (AXP Quote). Only Johnson & Johnson (JNJ Quote) finished in the red.

The tech-heavy Nasdaq, meanwhile, benefited from gains in Apple (AAPL Quote), Google (GOOG Quote), Oracle (ORCL Quote) and Sun Microsystems (SUNW Quote).

Many subdivisions of the market improved. The Amex Oil Index added 1.9%, both the Philadelphia Semiconductor Sector Index and the Philadelphia Housing Sector Index gained 1.7%, and the Dow Jones Transportation Average finished 1% higher.

"This was a relief rally that started overseas and shouldn't be surprising," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "Now we have some short-term support areas and we have something to work off of. We'll continue to trade off the technical picture and the global market environment."

Larry Wachtel, senior market analyst with Wachovia Securities, cautioned that stocks still may not be out of the woods. "We will have to watch out for selling into strength," he said.

Nearly 3.36 billion shares changed hands on the New York Stock Exchange, where advancers beat decliners by a 14-to-3 margin. On the Nasdaq, volume reached 2.14 billion shares, as winners trampled losers 4 to 1.