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Stocks Close Up More Than 1%

U.S. stocks closed up more than 1% Tuesday, a quick rebound from the prior session's losses.

The gains were broad, with financial shares among the leaders. JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC) and Citigroup (NYSE:C) were up between 2.5% and 4.5%.

Several traders said the gains were nothing more than a relief rally after Monday's steep sell-off, which was caused by continuing concern about Europe's debt crisis. Volume was said to be on the light side.

"Markets are in a holding pattern," said Douglas DePietro, managing director of trading at Evercore Partners.

The Dow Jones industrial average added 163 points, or 1.3%. The S&P 500 gained 15 points, or 1.2%. The Nasdaq rose 33 points, or 1.2%.

Art Hogan, managing director at Lazard Capital Markets, said he's concerned that it will be difficult to maintain the momentum.

"You see a modest updraft in the European markets, and we seem to be enthusiastic about that," Hogan said. "I think we're in the environment where the risk is more to the downside, especially on days where there is no catalyst."

Europe continues to be a worry, with yields on 10-year Spanish bonds hitting a euro-era high of 6.8%, indicating just how fearful investors are of the safety of Spain's sovereign debt.

Italian bond yields also rose Tuesday, remaining above the 6% benchmark -- a warning sign that the country could need a bailout of its own.

Adding to the pressure on Spain's banking system, Fitch Ratings downgraded 18 Spanish banks.

"Investors are really waiting for more direction from world leaders over the next seven to eight days," said Ryan Detrick, senior technical analyst at Schaeffer's Investment Research.