Stocks rose on Wednesday as investors snapped up shares of beaten-down companies following recent losses, and after new home sales rose last month to their highest in almost two years.

Industrial and bank shares ranked among the top gainers as Wall Street bounced back from a sell-off ignited by fears that the sovereign debt problems in Europe would evolve into another global financial crisis. The S&P 500 has fallen more than 10 percent from a closing high reached on April 23, putting the index into correction territory.

The CBOE Volatility Index <.VIX>, a barometer of investor fear known as the VIX, lost 8.1 percent after earlier tumbling 30.4 percent. That sent the VIX back to levels seen before the Spanish government took over a local lender on Saturday, which had revived anxiety about the strength of Europe's financial system.

Heavy machinery maker Caterpillar Inc gave the Dow

its biggest boost, rising 3 percent to $61.02. Bank of America Corp rose 1.3 percent to $15.69.

On a fundamental level, there are still problems. But on a technical basis, we were oversold, said Alan Lancz, president of Alan B. Lancz & Associates in Toledo, Ohio.

There isn't a lot of enthusiasm in the buying, but there are hopes that recent lows won't be breached.

A report showed that sales of newly built U.S. single-family homes rose far more than expected in April as buyers rushed to benefit from a government tax credit before it expired. D.R. Horton Inc added 2.7 percent to $12.43, while the Dow Jones U.S. home construction index <.DJUSHB> jumped 2.74 percent.

Luxury home builder Toll Brothers Inc advanced 3.2 percent to $21.27 after posting a second-quarter loss that narrowed from the previous year.

The Dow Jones industrial average <.DJI> was up 56.58 points, or 0.56 percent, at 10,100.43. The Standard & Poor's 500 Index <.SPX> was up 8.11 points, or 0.76 percent, at 1,082.14. The Nasdaq Composite Index <.IXIC> was up 25.15 points, or 1.14 percent, at 2,236.10.

A trio of Dow components received broker upgrades, including Boeing Co , Alcoa Inc and Home Depot . Boeing was among the Dow's top percentage gainers, rising 2.5 percent to $64.34, while Alcoa added 1.6 percent to $11.48 and Home Depot gained 1.4 percent to $34.46.

Citigroup Inc was also upgraded, and its stock rose 4.5 percent to $3.95.

Technology stocks also were counted among the day's gainers, with Apple Inc up 1.8 percent at $249.61 and Google Inc up 1.6 percent at $484.89.

On the downside, American Eagle Outfitters tumbled 16.3 percent to $12.87 after it gave a second-quarter outlook that was below expectations.

U.S. Treasury Secretary Timothy Geithner flew to Europe to press for united action to tackle the region's deepening debt crisis. The move came as the European Union said it might go it alone with a crisis levy on banks.

Also on the economic front, orders for durable goods rose much more than expected in April to their highest level since September 2008.

(Reporting by Ryan Vlastelica; Editing by Jan Paschal)