The optimists finally had their day today with the Dow zooming up a massive 619 points, its biggest one-day surge in four years, making up most of the losses from the last two days.  The reason behind this is as irrational as the logic behind the big sell off of the past week -- investors have finally seen the silver lining behind this correction, namely that there is now little chance of a September rate hike.  Even though this really should have been obvious weeks ago, today the market finally got it.  There are pros and cons to every market swing. The key to successful investing is not only being aware of both but keeping them balanced.  The hysterical volatility that has been so typical lately has been mostly because on any given day, most have looked only at one or the other. So the optimists have been predicting a bounce for days now and today it came through in a rather historic way.  Will it continue?  Until China settles down, not likely, but the smart money is still betting on further growth this year and that's all that counts.

In the past week, the S&P surrendered 11%, and got back 6 of that today.  A lot of people were expecting last night to be a disaster in China and even though the news from China did not improve, this no longer was impacting global stocks.  Other good news included a 2% rise in durable goods against a forecast of a 4% fall.  Capital goods also had their biggest gain in 13 months.  But today's really good news is that investors decided today that the recent pummeling was actually a good thing since stocks were overvalued.  Gee, it seems that's something that analysts have seen saying since the beginning.  What accounts for people suddenly listening?  Anyway, the 10.5 billion share volume, again way above average, means they were all listening today.

Markets | Wed Aug 26, 2015 5:18pm EDT

Wall Street chalks up biggest gain in four years

BY NOEL RANDEWICH

DJ:   16,285.51  +619.07     NAS:  4,697.54  +191.05      S&P:      1,940.51  +72.90

(Reuters) Wall Street racked up its biggest one-day gain in four years on Wednesday as fears about China's economy gave way to bargain hunters emboldened by expectations the U.S. Federal Reserve might not raise interest rates next month.

Led by Silicon Valley stalwarts Apple, Amazon and Google, the surge put the brakes on a six-day losing streak that saw the S&P 500 surrender 11 percent.

In a sign that a faltering Chinese economy and slumping global financial markets could affect U.S. monetary policy, New York Fed President William Dudley said the prospect of a September rate hike seemed "less compelling" than it was just weeks ago.

All 10 major S&P 500 sectors jumped, led by a dizzying 5.3 percent jump in the technology index .SPLRCT, its largest one-day rise since 2009.

Some of the late-day rally was driven by short-term traders, including many who had bet the market would fall and rushed to cut their losses, said Michael Matousek, head trader at U.S. Global Investors Inc in San Antonio.

A strong rally on Tuesday had evaporated in the final minutes of trading and turned negative.

“A lot of people were anticipating the last half of the day would roll over and fall off and that hasn't happened," Matousek said. "You could see the buying accelerating at mid-day and people saying 'I'm wrong', and starting to cover their shorts.”

The Dow Jones industrial average .DJI finished 3.95 percent higher at 16,285.51. Its gain of 619.07 points was its biggest since 2008.  The S&P 500 .SPX gained 3.9 percent to 1,940.51 and the Nasdaq Composite .IXIC added 4.24 percent to end at 4,697.54.

Dudley's dovish comments came even after data on Wednesday that appeared to strengthen the case for a rise in interest rates at a Fed policy meeting on Sept 16-17.

Durable goods orders rose 2 percent in July, compared with analysts' average forecast of a 4 percent fall. Orders for core capital goods, a proxy for business investment, rose 2.2 percent in the biggest gain in 13 months.

Shares in Apple (AAPL.O), which had taken a beating in recent weeks because of concern about demand in China for iPhones, provided the biggest boost to the S&P 500 and Nasdaqcomposite index, jumping 5.73 percent to $109.69.

Up to Tuesday's close, the Dow had lost 10.71 percent in the past six trading days and the Nasdaq composite .IXIC had shed 11.5 percent.

The S&P is now down 5.8 percent in 2015.

“We're still in a period of searching,” said Kurt Brunner, a portfolio manager at Swarthmore Group in Philadelphia, Pennsylvania. “You have more people taking advantage of upside. But we're in for some sloppy trading and I don't think it's over today. I don't think it's a straight shot up."

The recent pummeling in U.S. shares reduced valuations some investors had seen as pricey. The S&P 500's valuation was down to about 14.8 times expected earnings as of Tuesday's close, compared to around 17 for much of 2015 and below a 15-year average of 15.7, according to Thomson Reuters StarMine data, the most recent available.

Google (GOOGL.O) surged 7.72 percent after Goldman Sachs raised its rating to "buy" from "neutral". Amazon (AMZN.O) jumped 7.38 percent.

After the bell, Apple supplier Avago Technologies (AVGO.O) posted fiscal third-quarter earnings per share that beat analysts' expectations and its shares rose 2 percent.

During Wednesday's session, NYSE advancing issues outnumbered decliners 2,474 to 646. On the Nasdaq, 2,136 issues rose and 713 fell.

Underscoring the market's frailty, the S&P 500 index showed no new 52-week highs and 28 new lows, while the Nasdaq recorded five new highs and 142 new lows.

Volume was heavy, with about 10.5 billion shares traded on U.S. exchanges, far above the 7.6 billion average this month, according to BATS Global Markets.