Stocks bounced back Wednesday as the first day of hearings on the financial crisis, though contentious at times, turned out to be more civil than some investors had feared.
The market also got a boost from a Federal Reserve report showing continued modest improvement in the country's regional economies. Ten of 12 Fed districts reported a positive change in conditions while two reported mixed conditions.
The Dow Jones industrial average jumped 53 points, erasing its 36-point loss Tuesday, which marked Wall Street's first broad decline this year.
Major stock indexes dipped into negative territory early in the trading day as the first public hearing of the Financial Crisis Inquiry Commission got underway, starting with testimony by top executives of banking giants Goldman Sachs, Bank of America, JPMorgan Chase and Morgan Stanley.
But the market turned around as investors apparently were comforted by the relatively polite tone of the questioning.
Some on Wall Street had feared the hearings would feature angry venting by politicians on the panel and would lead to stricter regulation of financial companies.
"It was such a civil exchange of information that it basically appears that there won't be any meaningful punitive actions taken against the banks," said Richard Bove, an analyst with brokerage Rochdale Securities.
The Dow climbed 53.51 points, or 0.5%, to 10,680.77, a fresh 15-month-high.
Broader stock indexes rose more sharply but didn't wipe out their losses Tuesday.
The Standard & Poor's 500 index rose 9.46 points, or 0.8%, to 1,145.68, its seventh gain in the year's first eight trading days. The Nasdaq composite index climbed 25.59 points, or 1.1%, to 2,307.90.
The Russell 2,000 index of small-company stocks jumped 1.3%.
Treasury yields rose along with stocks as investors felt confident enough to retreat from the relative safety of U.S. debt. Signs of weakening demand from foreign central banks at a Treasury auction of $21 billion in 10-year notes also may have helped boost yields. The market yield of the benchmark 10-year note rose to 3.78% from 3.71% late Tuesday.
In Asia, stocks fell after a move late Tuesday by the Chinese government to restrict the amount of credit available from banks. Key stock indexes tumbled 3.1% in Shanghai and 2.6% in Hong Kong. Japanese shares fell 1.3%.
U.S.-traded shares of leading Chinese search engine Baidu shot up 14% after rival Google threatened to pull out of China. The surge came a day after Baidu, which trades on Nasdaq, declined 3.5% as Beijing's credit-tightening move contributed to Wall Street's slide Tuesday. Shares of Google, meanwhile, fell $3.39, or 0.6%, on Wednesday to $587.09.