NEW YORK -- U.S. stocks shot higher Tuesday, recovering some of their big loss from a day earlier, after a Federal Reserve official said he supported more measures to stimulate the economy.
Charles Evans, president of the Fed's Chicago bank, told Bloomberg News that he supported action to produce faster job growth. Last week, Fed Chairman Ben Bernanke said he was ready to act if the economy needs it but made no promises.
Energy stocks rose the most after the price of crude oil recovered from an eight-month low earlier in the day, but almost all industries in the U.S. market were higher.
The Dow Jones industrial average rose 162 points to 12,573. The broader Standard & Poor's 500 index rose 15 points to 1,324, and the Nasdaq composite index rose 33 points to 2,843.
Benchmark oil for July delivery was up 70 cents to $83.39 per barrel in electronic trading on the New York Mercantile Exchange.
Although stocks were higher, investors around the world still seemed uncertain whether Europe's plan to rescue Spain's ailing banks would be enough to prevent the continent's debt crisis from infecting other economies, like Italy.
Stocks had surged early Monday as investors seemed to bestow their approval on a weekend deal to make €100 billion ($125 billion) available to Spain to revive banks crushed by bad real estate loans. But those gains were erased in just a few hours, as observers worried the money might just add to the Spanish government's debts, and maybe eventually force it to seek its own bailout.
As a sign of investor wariness of Spain, the yield on its 10-year benchmark bond shot up. It was still climbing Tuesday, reaching 6.81%, a euro-era record. That's also dangerously close to the 7% yield that has forced other countries to seek rescue loans. Italy's yields were also rising.
Keeping pressure on Spain's markets was credit rating agency Fitch's decision to downgrade 18 domestic banks due to their exposure to Spanish government debt, which the agency had downgraded earlier this month. Spain's costs are edging closer to levels that sent Greece, Ireland and Portugal into triage.
And this upcoming weekend, an election in Greece may determine whether that economically troubled nation cuts itself free from the euro currency.
Stock markets in Europe were eking out some gains Wednesday, but the tremendous volatility the past day proves that Europe's problems are far from over.
"'Fragile' is perhaps the most appropriate word to describe sentiment at present," said Ben Critchley, a sales trader with IG Index. "Yesterday's trading showed that even 100 billion euro is not sufficient to rebuild battered investor confidence."
As is always the case with the eurozone, concern is never limited to one country. If Spain needs help, investors might worry that Italy will too. Both are enormous economies - the fourth- and third-largest in the currency bloc, respectively - and many think the eurozone cannot afford to rescue them.
Italy's government on Monday confirmed that country's recession is deepening. The economy contracted at a quarterly rate of 0.8% the first three months of the year, worst contraction in three years and double Spain's rate.
France's CAC-40 closed 0.1% higher at 3,046.91, while the DAX in Germany gained 0.3% to 6,161.24. The FTSE index of British shares climbed 0.8% to 5,473.74. The euro was flat at $1.2485.
Earlier in the day, Asian markets responded to the gloom that had settled over Europe and the U.S. late Monday.
Japan's Nikkei 225 index lost 1% to close at 8,536.72. South Korea's Kospi dropped 0.7% to 1,854.74 and Hong Kong's Hang Seng was 0.4% lower at 18,872.56.
Mainland Chinese shares lost ground, with the benchmark Shanghai Composite Index shedding 0.5% to 2,289.79. The Shenzhen Composite Index lost 0.4% to 942.18.