Late-minute reversal pulls Wall Street from bear territory

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The U.S. stocks ended higher on Tuesday, thanks to a strong rally in the last 30 minutes of trading led by banks, after report said that European leaders were working on ways to help banks with recapitalization.

The Dow Jones industrial average ended up 153.41 points, or 1. 44 percent, to 10,808.71 after tumbling more than 200 points in earlier session. JP Morgan Chase surged more than 6.5 percent, the best performer in the 30 Dow components.

The Standard & Poor's 500 rallied 24.72 points, or 2.25 percent, to 1,123.95, after flirting with bear market, while the Nasdaq Composite Index surged 68.99 points, or 2.95 percent, to 2, 404.82.

Major indexes were mired in negative territory for most of the time before the astonishing reversal happened in late session.

Concerns over European debt woes continued to dominate sentiment at the market open. Goldman Sachs Group cut its global growth forecast for this year and next on Tuesday, predicting recessions in Germany and France as the European economy stalls amid debt contagious risks.

According to Goldman Sachs, the world economy will expand at a rate of 3.8 percent this year and 3.5 percent in 2012, compared with earlier predictions of 3.9 percent and 4.2 percent respectively.

"The further deterioration in the economic and financial situation in the Euro area has led us to downgrade our global GDP forecast significantly," Goldman Sachs said in its report. "Over the next few quarters, we now expect a mild recession in Germany and France, and a deeper downturn in the Euro periphery."

Goldman Sachs predicted that the economy in euro zone countries will expand 1.6 percent this year and 0.1 percent in 2012, down sharply from its previous forecast of 1.3 percent.

However, stocks rebounded sharply before the market closed, as a Financial Times report showed EU finance ministers were looking into ways to recapitalize banks after agreeing that additional measures were needed to rescue the debt-ridden region's financial institutions.

Also providing some support, the U.S. Federal Reserve Chairman Ben Bernanke said on Tuesday that the central bank may take further steps to stimulus the economy as the "recovery is close to faltering".

Among stocks in focus, Apple on Tuesday unveiled the iPhone 4S, a faster version of its best-selling smartphone. However, its shares slipped after the release as many people were expecting a more advanced version of iPhone 5.