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Stocks rebound from five days of losses

Traders work on the floor of the New York Stock Exchange.
Traders work on the floor of the New York Stock Exchange.Brendan Mcdermid / REUTERS

Stocks rebounded Wednesday, recovering after five days of losses on the S&P 500 that brought the benchmark index down more than 4 percent.

The Dow Jones industrial average was lately up over 100 points.

Tuesday marked the largest daily percentage decline on the S&P in four months, and investors will evaluate if the slide presents an opportunity for those who missed the market gains in the first three months of the year.

"After a 12 percent gain on the S&P in the first quarter, this recent pullback should provide an entry opportunity for those underweight in stocks," said Andre Bakhos, director of market analytics at Lek Securities in New York.

Earnings season started on a high note Tuesday after aluminum producer and Dow component Alcoa Inc surprised Wall Street with a first-quarter profit, following a loss in last year's fourth quarter.

No S&P 500 components are scheduled to report earnings Wednesday.

The S&P closed Tuesday below its 50-day moving average for the first time since December. If it continues to trade below that average, now just above 1,372, the level could become technical resistance and a speed bump for future gains.

Bearish analysts see more declines ahead as a result of an overextended market that has lost its footing as the euro zone debt crisis resurfaces and U.S. economic indicators soften.

Still, the economy would have to take a "fairly dramatic" turn for the Federal Reserve to launch another round of monetary stimulus, Atlanta Fed President Dennis Lockhart said.

Signals that the Fed was not keen to push for more stimulus triggered the current market pullback last week.

In company news, the U.S. Justice Department sued Apple Wednesday over alleged electronic book price-fixing.

U.S.-traded shares of Nokia tumbled after the company said it has found a software bug in its Lumia 900 smartphone, its answer to Apple's iPhone, hurting its bid to turn around its U.S. business.

Investors will keep an eye on developments in Indonesia after a massive earthquake and aftershocks struck off its coast, bringing back memories of a 2004 tsunami that killed about 230,000 people in 13 Indian Ocean countries, including Thailand, Sri Lanka and India.

A fresh tsunami warning was issued for the entire Indian Ocean as big aftershocks struck Indonesia's Aceh province. Authorities in Indonesia said there were reports of sea-levels rising off Aceh, but by less than a meter (3.3 feet).

The Federal Reserve releases the Beige Book of regional economic conditions at 2 p.m. ET.

Reuters contributed to this report.