Stocks closed higher for a second session Wednesday, with the Dow logging its biggest gain in over a month, following the Fed's upbeat Beige Book report and as the White House pressed its case for military action in Syria.
The Dow Jones Industrial Average rallied 96.91 points to finish at 14,930.87, propelled by Intel and Coca-Cola, while Microsoft led the laggards.
Earlier, the Nasdaq briefly suffered another problem with its main data feed that was at the center of the outage that brought trading in Nasdaq securities to a halt for about three hours nearly two weeks ago. A Securities and Exchange Commission spokesman said the agency is in contact with the Nasdaq and is monitoring developments related to the data feed problem.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, declined near 16.
Most key S&P sectors were in positive territory, led by techs and financials. Utilities held modest losses.
(Read more: Cramer: This sector in an 'amazing renaissance')
The U.S. economy expanded at a "modest to moderate" pace in most of the country between early July and late August, according to a Federal Reserve's Beige Book, its region-by-region assessment of the economy, suggesting that the economy is reaching the point where the central bank could pull back on its asset-purchase program.
San Francisco Fed President John Williams said the central bank should start to trim its bond-buying program later this year and end it mid-2014, as long as the job market continues to heal and inflation heads back up toward 2 percent.
Meanwhile, President Obama urged lawmakers to approve his plan for a military strike on Syria during a news conference in Stockholm, adding the "international community's credibility is on the line." Obama's remarks came a day before the G-20 summit in St. Petersburg, hosted by Vladimir Putin. Obama said he held out hope that the Russian president would back away from his support for Assad.
U.S. Senate foreign relations panel passed authorization for use of military force in Syria. The vote by the panel clears the way for a vote on the resolution in the full Senate, likely next week.
On Tuesday, Obama clinched the backing of key Congress members including House Speaker John Boehner.
(Read more: Why oil prices may remain strong, war or no war)
On the economic front, the U.S. trade deficit increased 13.3 percent to $39.1 billion in July, according to the Commerce Department. Economists polled by Reuters had expected the trade deficit to rise to $38.7 billion.
Weekly mortgage applications climbed for the first time in four weeks as rates declined from their highest level this year, although demand for purchase loans dipped, according to the Mortgage Bankers Association.
The Labor Department is expected to release its widely-watched employment report on Friday, ahead of the Fed's September policy-setting meeting. Economists polled by Reuters expect non-farm payrolls to have increased by 180,000 jobs last month, up from a gain of 162,000 the month prior.
"The non-farm payrolls report for August released on Friday will likely prove far more crucial (than Wednesday's data), given the importance of labor market conditions and as such will likely generate a much greater reaction in financial markets," wrote Bank of Tokyo-Mitsubishi's Lee Hardman.
Ford Motor advanced after the automaker posted sales that climbed 12 percent from a year ago, logging its best month since August 2006. General Motors also rose after the company posted sales that jumped almost 15 percent. And rival Toyota posted August sales that surged nearly 23 percent.
Apple climbed near the $500 a day after the tech giant sent official invitations to a Sept. 10 event at which it is expected to unveil the latest version of the iPhone. Cantor Fitzgerald initiated coverage of the company with a "buy" rating and a price target of $777. And Wells Fargo raised its valuation range on the iPhone maker to $525-$575 from $485-$525.
Qualcomm edged higher after the tech company introduced its "Toq" smartwatch, a wrist-worn device that can play music and handle phone calls and messages.
Earlier, Samsung Electronics unveiled its much-anticipated "Galaxy Gear" smartwatch in Berlin. The company also introduced its new Galaxy Note 3 smartphone and the 2014 edition of its tablet the Galaxy Note 10.1.
Among earnings, Dollar General climbed after the value retailer posted quarterly results that topped Wall Street expectations, thanks to strong demand for its perishables, snacks and recently-added tobacco products.
H&R Block slumped after the tax preparer posted a wider-than-expected quarterly loss. At least two brokerages slashed their price targets on the company.
E-Trade soared to lead the S&P 500 gainers after the brokerage said its banking unit received regulatory approval to make a $100 million dividend payment to the parent company in September.
In other news, the Bank of Japan kicked off a two-day monetary policy meeting on Wednesday. While no new policy action is expected, the Asahi newspaper reported that the central bank may consider further easing if Prime Minister Shinzo Abe decides to hike sales taxes.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
THURSDAY: Challenger job-cut report, ADP employment report, jobless claims, productivity & costs, Fed's Kocherlakota speaks, factory orders, ISM non-mfg index, natural gas inventories, oil inventories, Fed balance sheet/money supply, chain-store sales, NYC fashion week, G-20 summit, new Yahoo logo
FRIDAY: Fed's Evans speaks, nonfarm payrolls, Fed's George speaks; Earnings from Smithfield Foods, Mattress Firm
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