U.S. stocks rallied

U.S. stocks rallied, after the Standard & Poor's 500 Index posted one of its steepest drops this year, amid a respite from a global equities selloff.

A surge in the final minutes pushed the S&P 500 up 1.8 percent to 1,948.87 at 4 p.m. in New York, closing at the session high after the gauge fell 3.8 percent over the previous two sessions. Equities jumped in early trading and then trimmed their gains by more than half before an afternoon rebound along with oil prices.

The benchmark equity gauge's 3 percent decline on Tuesday -- its third-biggest of 2015 -- marked a sour start to what has historically been the worst month of the year. The S&P 500 falls 1.1 percent on average in September, according to data compiled by Bloomberg going back to 1927.

Another troubling sign is that futures on Chicago Board Options Exchange Volatility Index have climbed, showing traders predict turbulent markets will endure. The gauge known as the VIX fell 11 percent Wednesday to 27.93, after a record monthly jump in August,up 135 percent.

The S&P 500 slumped 6.3 percent last month as China's currency devaluation spurred concern over global growth, erasing more than $5.7 trillion in equity market values worldwide, while volatility surged the most on record. The equity index entered a correction last week, only to then rally more than 6 percent over two days. It closed Wednesday 9.1 percent below its all-time high set in May.

Chinese shares closed lower on the last trading day of this week as investors assessed the level of state support before a major military parade on Thursday. Mainland markets will be closed Thursday and Friday to commemorate the end of World War II.

Amid continuing concerns that China's slowdown will weigh on the global economy, traders are now pricing in a 32 percent chance that the Federal Reserve will raise interest rates this month, down from 38 percent on Monday. Policy makers have a little more than two weeks to assess incoming data before deciding whether to act on rates.

A report from the Fed Wednesday said the economy expanded across most regions and industries in July and August as tighter labor markets boosted wages for some workers. Six of 12 Fed districts reported "moderate" growth, and five others said expansion was "modest," according to the Beige Book.

Data today on private payrolls showed companies added 190,000 workers in August, below the 200,000 forecast by economists surveyed by Bloomberg. Attention will focus on the government's monthly jobs report, due Friday, as a major data point before the Fed's meeting. A separate gauge Wednesday showed July factory orders rose less than forecast by economists.