Blue-chip stocks bounced back in New York yesterday, reversing course in the midst of a third day of heavy selling fuelled by disappointment over the Federal Reserve's cautious response to the global economic crisis.

The Dow Jones industrial average rose 152.16 - or by 2 per cent - to 7,784.69 after swinging from a 102-point loss to a 185-point gain.

Broader stock indexes also rebounded, although the technology-heavy Nasdaq market lagged the turnaround.

The Dow now sits 123 points below this year's starting point and about 1,550 points, or 16.6 per cent, below the July 17th record of 9,337.97.

The Standard and Poor's 500 rose 16.21 to 1,002.60 to halt a two-day 62-point slide. The Nasdaq composite index rose 2.65 to 1,614.98 after shedding nearly 122 points in the previous two sessions.

NYSE volume totalled 897.33 million shares, up slightly from 886.72 million at the same point on Thursday.