Another rally on Wall Street erases week’s losses

Stocks on Wall Street rallied for the second straight day Thursday and have now reversed the market’s sharp pullback at the start of the week.

The S&P 500 rose 1.2 percent, with more than 85 percent of companies in the benchmark index notching gains. The Dow Jones Industrial Average gained 1.5 percent and the Nasdaq rose 1 percent.

The rally put the major indexes on pace for weekly gains just four days after a broad sell-off handed the S&P 500 its biggest skid since May and knocked the Dow more than 600 points lower.

The market’s sharp swing from Monday, when the S&P 500 slumped 1.7 percent, to

Thursday, when it closed with 0.4 percent gain for the week, reflects how quickly investor sentiment can change, and is another example of how in a market that’s near all-time highs, traders tend to see waves of selling as buying opportunities.

Traders also were feeling uneasy about how quickly the Federal Reserve might elect to rein in some of the support measures it’s been giving the markets and economy.

Those worries were allayed by Wednesday, when the Federal Reserve signaled it wouldn’t begin considering such a tapering of support before at least November, and indicated it may start raising its benchmark interest rate sometime next year.