Stocks fight back

NEW YORK (CNNMoney.com) -- Stocks jumped Wednesday morning, recovering some ground after a two-session selloff sparked by worries about the ongoing turmoil in the credit and mortgage markets.

The Dow Jones industrial average (up 127.78 to 13,169.63, Charts) gained 0.9 percent almost two hours into the session. The broader S&P 500 (up 13.82 to 1,446.18, Charts) index added 0.9 percent and the Nasdaq Composite (up 29.38 to 2,530.02, Charts) gained 1.1 percent.

All three major gauges slumped over 2 percent Tuesday, as investors mulled the minutes from the last Federal Reserve policy meeting, weak reports on housing and consumer confidence, and ongoing credit and mortgage market woes.

Stocks had fallen Monday too, and after a two-session battering, investors were ready to dip their toes back in to equities on Wednesday.

Gains were broad based, with 27 out of 30 Dow components rising, led by Alcoa (up $0.63 to $35.99, Charts, Fortune 500), DuPont (up $0.58 to $48.71, Charts, Fortune 500), General Motors (up $0.88 to $30.06, Charts, Fortune 500) and Intel (up $0.83 to $24.79, Charts, Fortune 500).

Apple (up $5.69 to $132.51, Charts, Fortune 500) rose on speculation that its Sept. 5 media event will include the launch of a new iPod.

Seagate Technology (up $1.43 to $25.89, Charts) shares rose 5 percent after boosting its fiscal first quarter earnings and revenue forecast late Tuesday, citing stronger demand and better prices. Seagate makes computer hard-disk drives.

On the downside, PDL Biopharma (down $4.76 to $18.84, Charts) slumped 20 percent in unusually active Nasdaq trade after saying Tuesday that it was withdrawing its 2007 financial guidance and divesting its marketed drugs. The biotech also said that an experimental drug in late-stage trials failed.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by almost 5 to 1 on volume of 390 million shares. On the Nasdaq, advancers beat decliners 8 to 5 as 550 million shares changed hands.

Treasury prices rose, lowering the yield on the 10-year note to 4.50 percent from 4.51 percent late Tuesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar fell versus the euro and rose against the yen.

U.S. light crude oil for October delivery rose $1.13 to $72.86 a barrel on the New York Mercantile Exchange after the government's weekly report showed a bigger-than-expected drop in oil and gas supplies.

COMEX gold for December delivery rose $1.30 to $674.80 an ounce.