Investors are growing more confident in response to an improving credit market and hints from Federal Reserve Chairman Ben Bernanke that the government will take more steps to help the economy.

Share story

NEW YORK — Wall Street made another big advance today, with investors growing more confident in response to an improving credit market and comments from Federal Reserve Chairman Ben Bernanke hinting that the government will take more steps to help the economy. The Dow Jones industrial average gained more than 400 points, and all the major indexes advanced at least 3 percent.

The Dow closed up 413.21, or 4.7 percent, at 9,265.43. This is just the third time this month that the Dow has closed with a gain.

Broader indexes also rose sharply. The Standard & Poor’s 500 index climbed 44.85, or 4.8 percent, to 985.40. The Nasdaq composite index rose 58.74, or 3.4 percent, to 1,770.03.

Today’s huge gain doesn’t mean that the stock market is done with the volatility of recent weeks — past recoveries have seen stocks ratchet up and down. Still, there is a sense on the Street that the worst of the selling is over.

Investors who had sold furiously in recent weeks in response to immobile credit markets became more optimistic as bank-to-bank lending rates eased further.

The improvement in lending rates helped to temper concerns about tight credit contributing to a prolonged recession, but Federal Reserve Chairman Ben Bernanke still warned that the economy is likely to be “weak for several quarters, and with some risk of a protracted slowdown.” He told the House Budget Committee that a fresh round of government moves might help ease the country’s economic weakness.

“The market liked what Bernanke had to say, and there were hints that he’s leaving the door open for further moves in terms of rate cuts or economic stimulus,” said Ryan Larson, head of equity trading at Voyageur Asset Management. “And, with credit easing in slow baby steps, the market has started to realize that this is going to be a process.”

Wall Street was also sifting through the first of hundreds of earnings reports expected this week, seeking clues about future business conditions. Among those reporting, oilfield services provider Halliburton topped estimates, and CEO Dave Lesar told investors and analysts in a conference call, “We expect that any major macroeconomic disruptions will ultimately correct themselves.”

Trading was orderly for much of the day, but the final hour again saw frenetic activity, this time to the upside. The market’s tone was clearly better than during the previous two weeks, when investors’ heightened anxiety about credit markets and the economy sent stocks plunging. The relative calm in Friday’s session, when the Dow fell 127, and today’s trading, had more investors feeling confident that the worst of the market’s volatility was behind it.

Light, sweet crude rose $2.40 to $74.25 a barrel on the New York Mercantile Exchange. Last week, it sank to an almost 16-month low on worries about a deep global recession obliterating fuel demand.