NEW YORK—Wall Street rebounded Thursday, rising sharply as oil prices fell and investors took advantage of bargains in financial stocks after two straight days of heavy declines.

Crude backtracked as traders who sent oil soaring Wednesday in response to declining gasoline supplies realized that demand for fuel is still falling. Light, sweet crude fell 99 cents to settle at $115.01 a barrel on the New York Mercantile Exchange. The pullback helped reassure stock traders who are concerned that rising oil and gas prices would force consumers to keep paring back their spending.