New York - US stocks rallied on Tuesday in line with European markets after two straight sessions of steep declines in the wake of Britain's surprise decision to leave the European Union.
Analysts had predicted that stocks would rebound at some point after the S&P 500 shed more than 5% over two days following the shock Brexit vote. Some had viewed the market as oversold in the short run.
Especially strong sectors included banks, technology, energy and airlines. All had experienced bigger-than-average drops during the selloff.
The Dow Jones Industrial Average rose 1.6% to 17 409.72.
The broad-based S&P 500 gained 1.8% at 2 036.09, while the tech-rich Nasdaq Composite Index jumped 2.1% to 4 691.87.
Analysts cautioned that Tuesday's rally might not have staying power and US markets could see more volatility if European markets go through another bout of selling.
"We retraced about one third of the move downward and we still have as many questions as we did two days ago," said Art Hogan, chief market strategist at Wunderlich Securities.
Analysts do not expect the US economy to be as directly impacted by Brexit as Europe, although a stronger dollar would challenge American companies that rely on exports.
Banking shares were upward bound, with Bank of America and JPMorgan Chase gaining 4.3% and 3.3%, respectively.
Energy stocks benefited from a jump in oil prices. ExxonMobil advanced 2.3% and Schlumberger 2.1%.
Delta Air Lines climbed 3.9% and United Continental rose 3.2%.
Technology stocks that gained included Apple, up 1.7%, Facebook 3.4% and Microsoft 2.1%.