The S&P 500 index rose on Wednesday, snapping a seven-day losing streak, but worries about the economy kept investors jittery and trading volatile.

Trading was the busiest since mid-March, with more than 10 billion shares changing hands as the S&P dipped to a new low for 2011 before storming back to finish higher.

Technology shares gained after days of hefty selling that briefly pushed the Nasdaq into negative territory for 2011 before the composite index ended with solid gains.

But many investors view the gains as a short-term rebound after the S&P's 6.8 percent decline over the past seven days.

We are not in a bear market psychology yet, but we are definitely in a solid correction psychology, said James Dailey, portfolio manager of Team Asset Strategy Fund in Harrisburg, Pennsylvania.

Recent poor figures on consumer spending and factory activity underline the economy's precarious position after a weak first half of the year. That, along with the festering European debt crisis, is likely to keep buyers cautious.

The events in Europe and the U.S. debt ceiling issues that have been overshadowing the weak underlying fundamentals are gone now and investors are starting to realize that we are not in a good situation, Dailey said.

The S&P technology index <.GSPT> was up 1.2 percent while energy stocks were the hardest hit. The S&P energy sector <.GSPE> fell 0.6 percent.

The Dow Jones industrial average <.DJI> was up 29.82 points, or 0.25 percent, at 11,896.44. The Standard & Poor's 500 Index <.SPX> was up 6.29 points, or 0.50 percent, at 1,260.34. The Nasdaq Composite Index <.IXIC> was up 23.83 points, or 0.89 percent, at 2,693.07.

Helping the Nasdaq, Research In Motion shares rose 4.9 percent to $25.33 after unveiling two new and powerful versions of its touchscreen BlackBerry Torch, including an all-touch model, as it seeks to regain ground lost to Apple and Google.

MasterCard Inc shares also jumped 13.4 percent to $338.47 after the company reported second-quarter profit that rose 33 percent.

Traders said some buyers came into the market after comments from former Federal Reserve Vice Chairman Donald Kohn, who told the Wall Street Journal the Fed could consider a new round of stimulus to help the economy.

Driving the early losses was data showing the pace of growth in the U.S. services sector fell in July to its lowest since February 2010, while new U.S. factory orders fell in June, pulled down by weak demand for transportation equipment.

The news followed weaker-than-expected manufacturing data earlier this week, creating more angst about a pullback in the recovery.

Some 10.5 billion shares changed hands on the New York Stock Exchange, NYSE Amex and Nasdaq, the highest since mid-March and above the daily average of around 7.48 billion.

On the NYSE, advancers beat decliners 1,725 to 1,274.

On the Nasdaq, advancers outpaced decliners 1,511 to 1,054.

(Reporting by Angela Moon, Editing by Kenneth Barry)