NEW YORK (CNN/Money) - U.S. stocks rallied for a second straight session Wednesday as investors encouraged by prospects for lower interest rates snapped up technology, aerospace and drug shares.

A better-than-expected profit report from Cisco Systems sent the company's shares surging 8 percent.

But the gains during Wednesday's volatile trading session made back just part of a three-day tumble that ended Monday when the Nasdaq composite index hit another five-year low.

The Nasdaq rose 21.35 points, or 1.7 percent, to 1,280.90, after being down more than 16 points intraday.

The Dow Jones industrial average gained 182.06 points, or 2.2 percent, to 8,456.15; it was off nearly 60 points earlier Wednesday The Standard & Poor's 500 index rose 17.20, or 2 percent, to 876.77.

David Briggs, head trader at Federated Investors, linked some of the late-session gains to program buying by institutions which automatically snapped up shares during the afternoon slump.

But numerous rallies amid the market's two-year decline have proved short-lived. Briggs said this surge may be no different.

"I think the market is trying to make up its mind," Briggs told CNNfn's Street Sweep.

Gains in Merck (MRK: up $2.12 to $48.95, Research, Estimates), IBM (IBM: up $1.27 to $69.17, Research, Estimates) and Boeing (BA: up $1.69 to $41.10, Research, Estimates) lifted the Dow.

On the Nasdaq, Cisco Systems (CSCO: up $0.92 to $12.99, Research, Estimates), which makes equipment that routes information over the Internet, reported earnings, excluding one-time charges and other items, of 14 cents a share for the quarter ended July 27. That topped forecasts by 2 cents a share.

Cisco more than doubled its share buyback program, to $8 billion.

Charles Pradilla, chief investment strategist at S.G. Cowen, linked some of the stock market's stability to the bond market, where yields have tumbled enough to make stocks more attractive.

He also credited the Federal Reserve, which analysts now see as more likely to cut interest rates this year amid a recent string of weak economic data.

"That's a huge amount of protection for the market," said Pradilla, who is not betting on a sustained rally. "I don't think this is the beginning of a new bull market."

The Fed at its meeting next week is not expected to cut interest rates. But central bankers may prepare investors for another reduction in the overnight interbank lending rate following 11 rate cuts last year.

More stocks rose than fell Wednesday. Advancing issues on the New York Stock Exchange topped declining ones nearly 2-to-1 as 1.4 billion shares changed hands. Nasdaq winners beat losers 9-to-8 as 1.5 billion shares traded.

Overseas, Asia's markets rose along with Europe's. The dollar edged lower against the euro and yen. Treasury securities rose while crude oil futures slipped.

David Katz, chief investment officer at Matrix Asset Advisors, expects downbeat investor sentiment to keep the market struggling in the weeks ahead.

"Three years ago, you had irrational exuberance," said Katz. "Currently you've got irrational despondency."

Still, Katz believes this is a good time to be buying drug, financial and media stocks. He likes Walt Disney (DIS: down $0.48 to $13.90, Research, Estimates), one of three Dow components to slip Wednesday. SBC Communications (SBC: down $0.37 to $25.72, Research, Estimates) and Philip Morris (MO: down $0.41 to $47.85, Research, Estimates) also declined.

Because of a bruising three-day selloff that began Thursday, Wednesday's gains still leave the indexes below their recent peaks. The Dow is down nearly 300 points in August while the Nasdaq is nearly 5 percent below where it closed on July 30.