BarbaraKollmeyer

Markets reporter

NEW YORK (MarketWatch) — The U.S. stock market ended Wednesday’s choppy trading day with modest gains, extending its winning streak to three sessions, as investors widely expect the European Central Bank to deliver on monetary stimulus at its key meeting on Thursday.

Stocks shook off earlier worries and turned higher after media reports said that the ECB is considering a bond-buying program of about €50 billion a month to help revive the flagging eurozone economy.

A proposal from the European Central Bank’s Frankfurt-based executive board calls for bond purchases that would last for a minimum of one year, according to The Wall Street Journal on Wednesday morning. Stock markets were further boosted by a jump in oil prices as well as news that the Bank of Canada announced a surprise rate cut.

The S&P 500 SPX, +1.26%   switched between gains and losses, but closed 9.58 points, or 0.5%, higher at 2,032.13. Energy sector stocks led the gains, jumping 1.8%, while all 10 sectors closed higher.

The Dow Jones Industrial Average DJIA, +1.47%  added 39.05 points, or 0.2%, to 17,554.28. Gains on the blue-chip index would be higher still if it were not for a big drop in IBM, which was shaving off 31 points.

The Nasdaq Composite COMP, +0.89%   gained 12.58 points, or 0.3%, to 4,667.42.

Kristina Hooper, U.S. investment strategist at Allianz Global Investors, said a boost in confidence is due to a combination of ECB’s plan to inject liquidity into the system and higher oil prices.

Hooper attributed recent market volatility to the absence of quantitative easing from the Federal Reserve.

“The Fed’s QE had eliminated volatility over the past few years, but now, as the Fed moves towards normalizing or rasing rates, it makes sense that markets are choppy. Big swings in commodity and currency markets have also amplified stock market moves,” Hooper said.

Volatility aside, stocks are still a better place to be invested this years, contends Hooper.

“We expect modest earnings growth this year, but because of foreign demand for U.S. assets, we might also see modest expansion in multiples paid, which means stocks will end the year with modest single-digit gains, though the journey is not going to be easy,” she added.

Michael Gibbs, director of portfolio and technical strategy at Raymond James, said that the pullback in January so far was warranted given the overbought conditions at the very end of last year.