The Dow Jones Industrial Average (INDU) surged the most since 2011 and the Standard & Poor’s 500 Index capped its best two-day gain in three years as global equities rallied on theFederal Reserve’s pledge to be patient on boosting rates.

The S&P 500 added 2.4 percent to 2,061.23 at 4 p.m. in New York. The index climbed 4.5 percent over two days, the most since November 2011. The Dow gained 421.28 points, or 2.4 percent, to 17,778.15, the biggest one-day jump since December 2011. Technology shares soared as Oracle Corp. increased the most in six years. About 8.7 billion shares changed hands on U.S. exchanges, 22 percent above the three-month average.

“Just as with other instances, a dovish Fed is making up for a lot of bad news, fromEurope and from other parts of the world,” Russ Koesterich, chief investment strategist at New York-based BlackRock Inc., said in an interview on Bloomberg Television. “This is why you have this rebound rally after a few days of very harsh losses.”

U.S. stocks are rebounding from a seven-day decline that erased $1 trillion from equity prices and coincided with a 15 percent drop in West Texas Intermediate crude between Dec. 5 and Dec. 16. S&P 500 (SPX) energy producers tumbled 8 percent over the stretch while chemical and mining companies lost 7.4 percent. The S&P 500 is now 0.7 percent away from wiping out all its losses from the recent selloff.

A full recovery would be the fifth time this year the S&P 500 has come back after falling more than 4 percent from a high. In comparable drops beginning in January, April, July and September, the index needed about a month to erase losses, data compiled by Bloomberg show.

A full recovery would be the fifth time this year the S&P 500 has come back after falling more than 4 percent from a high. In comparable drops beginning in January, April, July and September, the index needed about a month to erase losses, data compiled by Bloomberg show.

David Fuller's view

The greater two-way volatility confirms that buying and selling pressure are currently more evenly matched.  Nevertheless, there is still no evidence that the bull market has ended, judging from this weekly chart of the S&P 500 Index.

Despite the overall strength of this uptrend, new highs have more often than not been followed by temporary dips back beneath the previous high, so those setbacks have continued to provide the better buying opportunities.  To state the obvious, this self-feeding conditioning process will continue until it stops.  Meanwhile, annual seasonal factors remain historically favourable, as does the post mid-term US presidential election cycle.  Fed policy remains munificent, in terms of low rates and the reinvestment of yields from their monster bond portfolio.