NEW YORK (AP) – Investors acted Wednesday like they had overdone it a day earlier.

Wall Street snapped back from a steep sell-off with a rebound in the same financial stocks that were pummeled Tuesday. Upbeat comments from banks, stronger-than-expected results from IBM Corp. and hopes that Washington will offer more help to the economy powered a rally that recovered most of the previous session’s losses.

The Dow Jones industrials surged nearly 280 points and all the major indexes rose more than 3.5 percent. Some bounce would have been expected after the Dow tumbled 332 points Tuesday but forecasts from PNC Financial Services Group Inc. and Bank of New York Mellon eased concerns that the troubles at financial giants like Citigroup Inc. were hitting all banks.

Many banks reversed double-digit drops from Tuesday with double-digit gains. PNC, which acquired National City Corp. on Dec. 31, jumped 37 percent after saying it would turn in a profit for 2008. And Bank of New York Mellon Corp. rose 23 percent after reporting that it managed to eke out a profit for the fourth quarter.

Citigroup Inc. surged 31 percent after falling 20 percent Tuesday. Bank of America jumped 31 percent a day after falling 29 percent. Chief Executive Ken Lewis’ report Wednesday that he bought 200,000 shares of common stock during the rout a day earlier encouraged investors.

And JPMorgan Chase & Co. rose 25 percent. Its CEO, Jamie Dimon, said he bought 500,000 shares of his bank’s stock on Friday.

IBM surprised investors late Tuesday with a forecast for the year that was well above what analysts expected. It reported a 12 percent rise in fourth-quarter profit that easily beat analysts’ estimates. And Swedish wireless equipment maker LM Ericsson also reported earnings that topped predictions.

It’s too early to say whether Tuesday’s plunge and Wednesday’s surge were overdone, said John Lynch, chief market analyst at Evergreen Investments in Charlotte, N.C. He contends the volatility will continue until investors gain more confidence. He predicts stocks will test the weakest levels of late November, when the Standard & Poor’s 500 index closed at an 11-year low.

“This is part of the painful bottoming process,” he said.

But Kevin Gaughan, equity strategist at Strong Financial Corp. in Milwaukee, said investors are slowly starting to look more at stocks on their merits rather than just engaging in the wholesale buying or selling seen last fall, when hundred-point swings in the Dow became commonplace.

“We’re shifting away from sort of painting the waterfront with broad brushes to more individual company and industry assessments” he said.

Investors looked again for insights into what steps the new administration will take to lift the economy. Treasury Secretary-designate Timothy Geithner told the Senate Finance Committee that passing President Barack Obama’s economic stimulus plan was essential. He also said the Senate’s move last week to release the second half of the government’s $700 billion financial industry rescue fund “will enable us to take the steps necessary to help get credit flowing.”

The Dow Jones industrial average rose 279.01, or 3.51 percent, to 8,228.10.

Broader stock indicators also gained. The Standard & Poor’s 500 index advanced 35.02, or 4.35 percent, to 840.24, and the Nasdaq composite index rose 66.21, or 4.60 percent, to 1,507.07.

The Russell 2000 index of smaller companies rose 14.69, or 3.39 percent, to 448.34. Investors often turn to smallcap stocks when placing bets on a market recovery.

Advancing issues outnumbered decliners by about 4 to 1 on the New York Stock Exchange, where consolidated volume came to 6.33 billion shares compared with 6.23 billion shares traded Tuesday.

Bond prices slumped as stocks rebounded and investors shifted money away from the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.55 percent from 2.37 percent late Tuesday. The yield on the three-month T-bill, in demand because it is considered one of the safest investments, rose to 0.12 percent from 0.10 percent late Tuesday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude rose $2.71 to settle at $43.55 a barrel on the New York Mercantile Exchange.

Kim Caughey, equity research analyst at Fort Pitt Capital Group, said the comments from PNC and other banks and results from IBM made clear that while it’s a difficult time for businesses, not all are struggling as much as some financial companies.

“It was a great reminder that businesses still have their lights on, their doors open and that they’re making money,” she said.

Stocks fell sharply Tuesday on worries governments would be forced to take over wobbly banks to avoid their collapse. The Dow dropped lost 332 points, or 4 percent. It was the first time the blue chips closed below 8,000 since November.

The Royal Bank of Scotland alarmed investors around the world this week with the warning its 2008 loss might top $41 billion. That spurred the British government to announce a fresh banking bailout. In the U.S., State Street Corp. – seen as one of the safer financial firms during the current turmoil because it is a custodial bank – lost more than half its value Tuesday after reporting its profits plunged and issuing a bleak forecast for 2009.

Among bank stocks, PNC jumped $8.16, or 37 percent, Wednesday to $30.16, while Bank of New York Mellon rose $4.24, or 23 percent, to $23.

Citigroup rose 87 cents, or 31 percent, to $3.67, and Bank of America rose $1.58, or 31 percent, to $6.68. Royal Bank of Scotland advanced 14 cents, or 4.2 percent, to $3.47, and State Street rose $2.18, or 15 percent, to $17.07.

JPMorgan rose $4.54, or 25 percent, to $22.63, and Wells Fargo advanced $2.42, or 17 percent, to $16.65.

Tech shares energized by IBM’s forecast outpaced much of the broader market Wednesday. IBM jumped $9.44, or 12 percent, to $91.42. Apple rose $4.63, or 5.9 percent, to $82.83 before reporting better-than-expected results after the closing bell Wednesday.

Overseas, Britain’s FTSE 100 fell 0.77 percent, Germany’s DAX index rose 0.50 percent, and France’s CAC-40 fell 0.67 percent. Japan’s Nikkei stock average fell 2.04 percent.

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