* Bank of America leads banks higher on heavy volume
* Gold ETF drops, gold miners down
* Dow up 1.3 pct, S&P up 1.3 pct, Nasdaq up 0.9 pct * For up-to-the-minute market news see [STXNEWS/US] (Adds trading volume in final two paragraphs)
By Angela Moon
NEW YORK, Aug 24 (Reuters) - U.S. stocks posted strong gains for a second day on Wednesday as investors jumped back into beaten-down financial shares and backed away from safer assets like gold in volatile trading.
The stock market swung back and forth as investors anticipated a key speech from Federal Reserve Chairman Ben Bernanke on Friday. There had been hope the Fed chief would hint of stimulus to aid the struggling economy, but a more likely outcome is for gradual measures.
"Some investors have been buying because it feels, looks like perhaps we've seen the lows of the correction," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York.
"(But) savvy investors don't expect QE3. They do not expect the Federal Reserve to unveil anything significant."
The Dow Jones industrial average <.DJI> was up 142.51 points, or 1.28 percent, at 11,319.27. The Standard & Poor's 500 Index <.SPX> was up 15.19 points, or 1.31 percent, at 1,177.54. The Nasdaq Composite Index <.IXIC> was up 21.63 points, or 0.88 percent, at 2,467.69.
The S&P has risen for three straight sessions.
Bank of America Corp
The S&P financials index <.GSPF> advanced 2.8 percent, with
JPMorgan Chase & Co
Traditional value stocks such as CVS Caremark
Bernanke is due to address central bankers at an annual symposium in Jackson Hole, Wyoming on Friday. His speech last year laid the groundwork for the Fed's unprecedented $600 billion bond buying program, known as quantitative easing, or QE2, to revive a sputtering U.S. economy.
Exchange-traded funds tracking gold stocks and gold-mining
stocks fell after bullion futures dropped more than 5 percent
in the metal's worst one-day loss since 2008. The SPDR Gold
Trust Index
The CBOE Volatility index VIX <.VIX>, Wall Street's fear gauge, fell but remained at high levels, and investors preferred buying traditional value stocks, suggesting there was caution in the market.
The VIX fell 2.5 percent to 35.36 in late session. The gauge generally moves inversely to the stock market as it tracks the price investors pay for protective options on the S&P 500 index.
Barrick Gold
Sectors that led Tuesday's rally, such as energy and
technology, shed gains. Growth stocks such as Nvidia
Earlier, the government reported that orders for long-lasting U.S. manufactured goods surged in July, rising twice as much as economists had forecast. [ID:nN1E77N096]
About 8.21 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, slightly lower than last year's daily average of about 8.47 billion.
On the NYSE, advancers beat decliners by a ratio of 2,086 to 923. On the Nasdaq, advancers also beat decliners by 1,689 to 853. (Reporting by Angela Moon, Editing by Kenneth Barry)