For the second day, the "glass half-full" crowd has come through with shining colors as the markets once again rallied strongly, this time to the tune of another whopping 369 points on the Dow.  That effectively recoups all the losses from the previous eight consecutive and historic losing sessions.  In fact, it was a disaster in reverse since, the trend lately has been for a big rally during the day, followed by enormous losses just before close.  Today, it was a big sell off in mid-afternoon with the Dow down another big 400 points by 3 p.m. only to have another huge rally to put the Dow up nearly 400 points by the close at 4 p.m.  What happened was some of the best news from the recovery yet.

As Q2 has largely been expected to end up in negative numbers, but mostly positive reports since July had largely forced a revision to a modest 2.3% gain, today's report said that Q2 was actually coming in at a whopping 3.7% gain, far better than had been expected, certainly far better than hoped for.  This report put on rather solid ground that the U.S. economic recovery is chugging along quite well, at a far better pace than had been feared and certainly the envy of the rest of the world.  This rally also accounted for the strongest 2-day gain since 2008.  The last two days combined now puts the S&P at 15.4 times earnings, up 0.4 just since yesterday.  As today's New York expert said, "Can the U.S. economy prove the naysayers wrong?  Well, so far it has been able to do that and today's data really puts a line under that."  Volume was quite strong at 9.9 billion and the last 15 day average of 8.1 billion has been the highest of the year.  The only downside is that I guess the correction is now technically over, which means stocks are once again overvalued.  That means more volatility is in our future, but hopefully China will settle down soon and alleviate at least some of that.

Markets | Thu Aug 27, 2015 5:49pm EDT

Wall St. logs biggest two-day gain since financial crisis

BY NOEL RANDEWICH

DJ:  16,654.77  +369.26      NAS:  4,812.71  +115.17       S&P:  1,987.66  +47.15

(Reuters)  Wall Street rallied more than 2 percent on Thursday as strong U.S. economic data and hints that a September interest-rate hike was unlikely fueled optimism that the worst of recent market turmoil was over.

The Dow Jones industrial average scored its biggest two-day percentage gain since 2008, while the S&P 500 and Nasdaq Composite racked up their biggest two-day increases since 2009.

"The worst is probably behind us but it's going to take a while before we get back to normal and we might still see some downward risk," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

With Thursday's gains, the S&P has recovered about half of the 11-percent meltdown it suffered over a six-day losing streak caused by fears of slowing growth in China.

The market slump stopped on Wednesday after New York Fed President William Dudley said the case for a September hike had become "less compelling".

Data on Thursday showed that the U.S. economy grew 3.7 percent in the second quarter - much faster than the previous estimate of 2.3 percent.

"It's the U.S. economy versus the global economy," said Peter Kenny, chief market strategist at Clearpool Group in New York. "Can the U.S. economy prove the naysayers wrong? Well, so far it has been able to do that and today's data really puts a line under that."

Traders gave a one-in-four chance that the Fed would increase interest rates in September even after the upbeat economic growth number.

Fed interest rates kept near zero helped fuel the stock market to historic levels since the financial crisis.

Even if the Fed does not tighten policy in September, expectations of an eventual hike will remain a major overhang on sentiment, warned Jim Bianco, president of Bianco Research in Chicago.

"The era of easy money would officially be over," Bianco said. "A rate hike would mean putting the needle away, no more drugs, time for the methadone."

To that end, investors will keep an eye on an annual conference of some of the world's top central bankers in Jackson Hole, Wyoming over the next few days for further clues on interest rates.

The Dow Jones industrial average .DJI  2.27 percent to end at 16,654.77 and the S&P 500 .SPX  jumped 2.43 percent to 1,987.66.  The Nasdaq Composite .IXIC added 2.45 percent to 4,812.71.

In the past two sessions, the Dow is up 6.3 percent, the S&P is 6.4 percent higher and theNasdaq has gained 6.8 percent.

All 10 major S&P sectors rose sharply, with the energy index's .SPNY 4.9 percent jump leading the advancers as oil prices soared more than 9 percent in one of the biggest one-day rallies in years.

Giving the biggest boost to the S&P and Nasdaq, shares of Apple (AAPL.O) surged 2.94 percent. The company invited journalists to a Sept. 9 event, where it is expected to unveil new iPhones.

Tesla (TSLA.O) was up 8.07 percent after its Model S P85D received the highest possible score in tests by Consumer Reports magazine.

The recent pummeling in U.S. shares reduced valuations some investors had seen as pricey. The S&P 500's valuation was about 15.4 times expected earnings as of Wednesday's close, compared to around 17 for much of 2015, according to the most recent available Thomson Reuters StarMine data.

Advancing issues outnumbered decliners on the NYSE by 2,803 to 324. On the Nasdaq, 2,209 issues rose and 638 fell.

The S&P 500 showed one new 52-week high and one new low, while the Nasdaq recorded 19 new highs and 49 new lows.

About 9.9 billion shares traded on U.S. exchanges and the 15-day moving average of 8.1 billion was the highest this year, according to Thomson Reuters data.