NEW YORK (

TheStreet

) - Stocks surged to finish near session highs Wednesday as a plunge in gold prices and a lack of negative headlines cleared the way for investors to take riskier bets.

The

Dow Jones Industrial Average

gained 144 points, or 1.3%, at 11,320. The

S&P 500

climbed 15 points, or 1.3%, at 1178, while the

Nasdaq Composite

closed ahead 22 points, or 0.9%, to 2468.

Wednesday's action follows two up days for the major indices, including rallies of at least 3% across the board yesterday. The Nasdaq enjoyed the most dramatic rise on Tuesday, advancing 4.3%, and was still able to post modest gains today after spending much of the session below the flatline.

Earlier in the session, the Dow had swung more than 170 points from its morning high to an intraday low of 11,134. The impressive rally in the final hour before the closing bell was similar to Tuesday's action.

Speculation about what

Federal Reserve

Chairman Ben Bernanke will say in Jackson Hole, Wy. has been swirling this week with many analysts warning the assumption that Bernanke will hint at further economic stimulus come Friday may be presumptuous.

After weeks of extreme volatility, Andrew Busch, market strategist at BMO Capital, described Wednesday's action as a "breather day" given the lighter volume, saying: "The enormous swings are difficult to stomach but not surprising given the tremendous amount of uncertainty."

Busch said the market has built a strong case to sell first and ask questions later, so positive data like the durable goods number has been met with skepticism.

The U.S. Census Bureau reported

durable goods orders jumped 4% in July, after falling 1.3% in June. The level exceeded expectations for an increase of 1.9%, according to

Briefing.com

, but still pointed to weak business spending, given that the main boost came from a surge in commercial aircraft orders.

A report from the Congressional Budget Office projecting the unemployment rate will remain above 8% until 2014 also put a damper on optimism. The report also estimated that the U.S. deficit will be $1.3 trillion as of Sept. 30, compared with its forecast of $1.14 trillion in April because of lower federal spending.

Financial stocks, which have taken a thrashing in recent days, experienced measured losses. Credit spreads narrowed suggesting that borrowing conditions for banks were easing. Some analysts began advising

investors buy bank stocks given that many have fallen dramatically in the past month. "At this moment, liquidity and values are more compelling than the next disaster," said Rochdale Securities analyst Dick Bove in a recent note.

Bank of America

(BAC) - Get Report

,

American Express

(AXP) - Get Report

and

JPMorgan Chase

(JPM) - Get Report

traded near the top of the Dow.

The

Financial Select Sector SPDR ETF

(XLF) - Get Report

rose 1% to $12.50. Bank of America made a 11% comeback today.

Basic Materials, technology and energy stocks were the session's lagging sectors.

Exxon Mobil

(XOM) - Get Report

was the only Dow component that closed in the red.

Late Tuesday

Moody's Investors Service

lowered the credit rating on Japan by one notch to Aa3 from Aa2 with a stable outlook. The ratings agency cited "large budget deficits and the build-up in Japanese government debt since the 2009 global recession."

The FTSE in London jumped 1.5% and the DAX in Frankfurt surged 2.7%. Hong Kong's Hang Seng fell 2.1% and Japan's Nikkei lost 1%.

Market breadth in the U.S. market was weighted to the positive 62% of the 3.9 billion shares trading on the New York Stock Exchange gaining ground and 36% declining. Some 1.6 billion shares changed hands on the Nasdaq.

In corporate news,

Par Pharmaceuticals

(PRX)

agreed to purchase privately-held rival

Anchen Pharmaceuticals

for $410 million in cash. Par's stock gained 3.7% to $30.29.

Shares of specialty retailer

Pacific Sunwear of California

(PSUN)

tanked more than 32% to $1.47 after

guiding for a third-quarter non-GAAP loss of 10 to 18 cents a share. The market had been projecting a loss of 6 cents a share.

Mining company

BHP Billiton

(BHP) - Get Report

reported a

increase in second-half profit that jumped 62% to $11 billion, excluding certain items, but fell short of the average $11.7 billion estimate of analysts polled by Thomson Reuters. The stock inched up 0.06% to $80.95.

Shares of

Avago Technologies

(AVGO) - Get Report

rose more than 10% to $32.27 after the

supplier of semiconductor devices surpassed Wall Street's third-quarter estimates and guided for sequential growth in revenue in the current period.

Luxury homebuilder

Toll Brothers

(TOL) - Get Report

said earnings rose to $42.1 million, or 25 cents a share, which included a tax benefit of $38.2 million. Revenue slipped 13% to $394.3 million, missing estimates for sales of $403.6 million. The company also said it

is too soon to assess how recent financial volatility has impacted housing markets. The stock was up 4.6% to $15.42.

Amid the stock rally, gold prices plummeted, having lost more than $150 an ounce in the prior two days. Gold for December delivery shed $104 to settle at $1,754.10 an ounce.

Elsewhere in commodities, the October crude oil contract shed 28 cents to trade at $85.16 a barrel. The Energy Information Administration said crude oil inventories declined by 2.2 million barrels in the week ended Aug. 19, more than analysts had projected.

Late Tuesday, the American Petroleum Institute said crude supplies lost 3.34 million barrels last week.

The benchmark 10-year Treasury was declining 18/32, lifting the yield to 2.218%. The dollar strengthened against a basket of currencies, with the dollar index up by 0.2%.

.

-- Written by Chao Deng and Melinda Peer in New York

.