Dow in triple-digit comeback

NEW YORK (CNNMoney.com) -- Stocks staged a comeback late Tuesday, with the Dow and S&P 500 rallying near the end of a choppy session, following a surge in commodity and financial shares.

The Dow Jones industrial average (INDU) gained 123 points, or 1.3%, and the S&P 500 index (SPX) rallied 11 points, or 1.1%. Both ended the previous session at the lowest point since Nov. 4.

The tech-fueled Nasdaq composite (COMP) erased bigger afternoon losses to close down by 3 points, or 0.2%, which nevertheless was the lowest close since Feb. 10.

Stocks churned in the morning, as investors weighed Federal Reserve Chairman Ben Bernanke's positive comments about the economy with continued fears about the global outlook. But by the early afternoon, the Dow and S&P had turned higher as investors eyed the rising euro and a rally in commodities.

"It was a really volatile day, moving from negative to positive several times," said Paul Brigandi, senior portfolio manager at Direxion Funds.

He said that the volatility is bound to continue as investors try to get a handle on the outlook for the global economy.

"Investors are on edge right now," he said. "Technically, we're looking pretty bearish, but we could see a period of consolidation for a few weeks here before there's another leg down."

COMEX gold for August delivery rose $4.80 to settle at a record high of $1,245.60 an ounce.

Market correction: Stocks were hit hard Friday and Monday after last week's disappointing May jobs report and more concerns about the European debt crisis and the weak euro.

Such worries have weighed on markets for weeks as investors have tried to suss out whether the United States is in danger of falling into a so-called double-dip recession. A brutal May and rough start to June has left the major stock indexes down more than 10% from the rally highs hit in last April, with some analysts looking for declines of more than 20%, the definition of a bear market.

"Most of the charts of the major gauges look terrible and I think it's going to be a difficult summer," said Tom Schrader, managing director at Stifel Nicolaus.

"I just don't think the efforts in Europe are going to be enough and China is slowing as well," he said.

Schrader said he could see the stock indexes losing as much as 25% off the highs before stabilizing.

Bernanke: The Federal Reserve Chairman said at an event Monday night that he doesn't expect the U.S. economy to fall back into a recession again. In addition, he said that the steps European leaders were taking to control rising deficits were helping.

Euro: The euro rose 0.1% versus the dollar after churning in the morning and touching a four-year low of $1.188 Monday. The dollar fell 0.1% against the yen.

The direction of the euro tends to be taken as a proxy for worries about the European debt crisis and its impact on the global economy. Hungary's debt has become the latest concern for investors, adding to ongoing worries about Greece, Spain and the other so-called PIIGS nations - Italy, Ireland and Portugal.

Company news: McDonald's (MCD, Fortune 500) reported that sales at stores open a year or more rose 4.8% worldwide and 3.4% in the United States as consumers continued to buy its fast food. The company has reported rising sales in the United States for four months straight.

However, the Dow component warned that full-year profits would be hurt by the impact of the weak euro. Big multi-nationals such as McDonald's benefit from a strong euro as foreign sales convert back to more U.S. dollars. Shares rose 2%.

BP (BP) and Transocean (RIG) shares slumped in the ongoing fallout from the oil spill in the Gulf. On Monday, BP said it was having some success with its latest attempt to stop the flow of oil following the explosion and sinking of the Deepwater Horizon rig. But investors remained wary after published reports looked at the slim, but possible risk of bankruptcy for BP in the wake of the disaster.

The rig was operated by Transocean and contracted to work on an oil well leased by BP.

But other energy-sector stocks rallied, including Exxon Mobil (XOM, Fortune 500), Schlumberger (SLB) and ConocoPhilips (COP, Fortune 500).

Exxon Mobil is a Dow stock. Other big Dow gainers included Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), DuPont (DD, Fortune 500) and Procter & Gamble (PG, Fortune 500).

A variety of big tech shares fell, including Intel (INTC, Fortune 500), eBay (EBAY, Fortune 500), Oracle (ORCL, Fortune 500) and Microsoft (MSFT, Fortune 500).

Market breadth was mixed. On the New York Stock Exchange, winners beat losers three to two on volume of 1.6 billion shares. On the Nasdaq, decliners topped advancers three to two on volume of 2.66 billion shares.

World markets: European markets slipped. Britain's FTSE 100 lost 0.8%, Germany's DAX gave up 0.6% and France's CAC 40 retreated 1%.

Asian markets inched higher. Japan's Nikkei rose 0.2%, Hong Kong's Hang Seng gained 0.6% and China's Shanghai Composite added 0.1%.

Commodities: U.S. light crude oil for July delivery rose 55 cents to settle at $71.99 a barrel on the New York Mercantile Exchange.

Bonds: Treasury prices rose, lowering the yield on the 10-year note to 3.17% from 3.18% late Monday. Treasury prices and yields move in opposite directions.