The Dow and S&P 500 rose more than one per cent yesterday, extending their rebound from the previous session, while oil prices fell sharply after US data fanned fears of oversupply.
European shares also jumped and equities' trading was less choppy than in Tuesday's session.
The Cboe Volatility Index, the VIX, the most widely followed barometer of expected near-term volatility for the S&P 500 index, eased after rising sharply earlier in the week.
On Tuesday, US equities had roared back from Monday's selloff, when the Dow and S&P 500 saw their biggest one-day declines in two years.
“Now that the volatility event is over, investors will focus on the economic data and the fundamentals,” said Sameer Samana, global equity and technical strategist at Wells Fargo Investment Institute in St. Louis.
But he said equities could see more declines before investor confidence is rebuilt.
The Dow Jones Industrial Average rose 378.68 points, or 1.52 per cent, to 25,291.45, the S&P 500 gained 32.48 points, or 1.21 per cent, to 2,727.62 and the Nasdaq Composite added 54.36 points, or 0.76 per cent, to 7,170.24.
The pan-European FTSEuro-first 300 index rose 2.31 per cent and MSCI’s gauge of global stocks gained 1.06 per cent.
Emerging market stocks rose 0.18 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.15 per cent lower, while Japan’s Nikkei rose 0.16 per cent.
In the energy market, oil prices fell. US crude fell 2.08 per cent to $62.07 per barrel and Brent was last at $66.12, down 1.11 per cent.
It was a steep spike in yields last Friday that sparked the initial Wall Street rout, forcing sales by a host of highly leveraged funds, which ramped up volatility and drove yet more selling.
Investors are wary of US lawmakers wrangling to extend the so-called debt ceiling: funding for the government runs out today unless a stopgap bill managed to pass the Senate later yesterday.
Like many others, BlackRock analysts described the rout as a buying opportunity, seeing the leveraged products moves as essentially driven by jitters over recent equity gains on one hand and the possibility of higher interest rates on the other.
Strategists point out that the improving global economic outlook is positive for stocks overall.
US Treasury prices fell before the Treasury Department was due to auction new 10-year notes.
The U.S. dollar rose against most major currencies amid the gains on Wall Street. The dollar index rose 0.61 per cent, with the euro down to $1.2292.