NEW YORK (CNNMoney) -- U.S. stocks closed up more than 1% Tuesday, a quick rebound from the prior session's losses.
Several traders said the gains were nothing more than a relief rally after Monday's steep sell-off, which was caused by continuing concern about Europe's debt crisis. Volume was said to be on the light side.
"Markets are in a holding pattern," said Douglas DePietro, managing director of trading at Evercore Partners.
The Dow Jones industrial average () added 163 points, or 1.3%. The S&P 500 ( ) gained 15 points, or 1.2%. The Nasdaq ( ) rose 33 points, or 1.2%.
Art Hogan, managing director at Lazard Capital Markets, said he's concerned that it will be difficult to maintain the momentum.
"You see a modest updraft in the European markets, and we seem to be enthusiastic about that," Hogan said. "I think we're in the environment where the risk is more to the downside, especially on days where there is no catalyst."
Europe continues to be a worry, with yields on 10-year Spanish bonds hitting a euro-era high of 6.8%, indicating just how fearful investors are of the safety of Spain's sovereign debt.
Italian bond yields also rose Tuesday, remaining above the 6% benchmark -- a warning sign that the country could need a bailout of its own.
Adding to the pressure on Spain's banking system, Fitch Ratings downgraded 18 Spanish banks.
"Investors are really waiting for more direction from world leaders over the next seven to eight days," said Ryan Detrick, senior technical analyst at Schaeffer's Investment Research.
Elections in Greece this Sunday are seen as a pivotal moment that could determine if the country remains a member of the euro currency union. And early next week, leaders from the Group of 20 will be meeting in Mexico.
U.S. stocks closed Monday trading with all three indexes down more than 1%.
World markets: European stocks ended higher. Britain's FTSE 100 ( ) ticked up 0.8%, while the DAX ( ) in Germany gained 0.3% and France's CAC 40 ( ) edged 0.1% higher.
Asian markets closed lower Tuesday, after ending higher Monday followingstronger economic readings out of China. The Shanghai Composite ( ) fell 0.7%, while the Hang Seng ( ) in Hong Kong slid 0.4% and Japan's Nikkei ( ) ended down 1%.
Economy: The Treasury Department released its monthly budget report showing a $125 billion deficit for May. It was a reversal of course after a $59 billion surplus in April, the first monthly budget surplus since September 2008.
Shares of Berkshire Hathaway (Fortune 500) closed higher after Warren Buffett's holding company made an offer to purchase the mortgage division and loan portfolio of Residential Capital in its Chapter 11 proceedings.,
Shares of Zynga (all-time low, dropping more than 10% on fears of a sharp drop in users for the social gaming company.) sank to an
Shares of Michael Kors () shot up after the fashion retailer reported fiscal fourth-quarter sales that more than doubled from last year's results. The report easily topped forecasts as well as the company's earlier guidance.
Juniper Networks () shares rose after the company announced a $1 billion share repurchase plan late Monday.
Apple (Fortune 500) shares nudged higher Tuesday after dropping Monday -- the day of its developer's conference. Its announcement of the new MacBook Air and other products wasn't enough to pull it from a recent slump.,
Shares of First Solar () soared after news reports said the company would not close a German plant until the end of the year because of unexpected increase in demand in Europe.
Oil for July delivery gained 62 cents to $83.32 a barrel.
Gold futures for August delivery gained $17 to $1,613.80 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury fell, taking the yield up to 1.67% from 1.6% late Monday.
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