By Lewis Krauskopf
(Reuters) - Wall Street recorded big gains for a second day on Wednesday as investors continued to scour for bargains and digest the fallout from Britain's stunning vote to leave the European Union.
The S&P 500 has recouped more than half of its losses from the two-day equities rout sparked by the British referendum, which had erased $3 trillion in value from global equity markets, according to S&P Dow Jones Indices.
The S&P financial sector <.SPSY>, which was beaten up in the wake of the vote, gained 2.3 percent, leading all sectors.
Energy shares <.SPNY> jumped 2 percent, supported by higher oil prices. All 10 industry groups closed higher.
"It’s not the end of the world and it never was the end of the world, and to have these kinds of reactions was ridiculous," said Jeff Weniger, senior portfolio strategist at BMO Private Bank in Chicago.
The Dow Jones industrial average <.DJI> rose 284.96 points, or 1.64 percent, to 17,694.68, the S&P 500 <.SPX> gained 34.68 points, or 1.7 percent, to 2,070.77 and the Nasdaq Composite <.IXIC> added 87.38 points, or 1.86 percent, to 4,779.25.
The gains marked the biggest two-day run for the S&P 500 in four months.
Wall Street's rebound in the past two days has coincided with a bounce in oil prices, which rose on Wednesday after a larger-than-expected drawdown in U.S. crude inventories.
"People are still using oil as kind of a proxy for a read on the global economy," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. "If oil prices firm, that seems to be giving a little bit more breathing room that Brexit and everything else isn’t going to just tank the global economy."
Adding to the positive sentiment, U.S. consumer spending rose for a second straight month in May on increased demand for automobiles and other goods. But there are fears Brexit could hurt confidence and prompt households to cut back on consumption.
Traders have largely discounted a near-term U.S. interest rate increase, betting on only a 16-percent chance of a hike at the Federal Reserve's December meeting, according to the CME Group FedWatch website.
"The delay in expectations for any type of a rate hike is helping the overall market enjoy the prospect of a longer period of easy-money policy," said Tim Ghriskey, chief investment officer of Solaris Asset Management in New York.
Investors are still bracing for volatility in coming weeks amid uncertainty about how Britain will pursue its EU exit, with some pointing to more possible downside. The S&P 500 was within 17 points of its May 2015 record high last Thursday.
Tesaro <TSRO.O> soared 108 percent to $77.40 after the company's ovarian cancer drug met its main goal. The stock was the top percentage gainer on the Nasdaq.
About 8 billion shares changed hands in U.S. exchanges, above the roughly 7.5 billion average over the past 20 sessions.
NYSE advancers outnumbered decliners by a 6.07-to-1 ratio; on the Nasdaq, a 3.78-to-1 ratio favored advancers.
The S&P 500 posted 48 new 52-week highs and no new lows; the Nasdaq recorded 41 new highs and 43 new lows.
(Additional reporting by Chuck Mikolajczak in New York and Yashaswini Swamynathan in Bengaluru; Editing by Saumyadeb Chakrabarty and Nick Zieminski)