Stocks overcame an array of dismal economic reports and rode hopes that the market may have achieved at least a temporary bottom to close higher Wednesday.
As the market awaits Friday's Labor Department jobs number, separate private reports showed joblessness in November hitting seven-year highs, while a productivity report indicated worker output slowing though not by as much as analysts had thought.
But after a brief slump off the open and a few more forays into negative territory through the day, the market managed to slug out a modest gain, albeit on anemic trading volume.
Details from the Federal Reserve's Beige Book summary of economic conditions had only passing impact on the markets as the central bank noted that lending had increased a bit but economic conditions overall were still dismal.
Noted trader Bill Miller of Legg Mason, whose portfolio has had a dismal year, was the latest high-profile expert to call a bottom, though it was unclear if Wall Street was ready to accept that the worst was over.
"We're trying again to say some of the bad news is baked in the cake. Maybe we're putting in a bottoming process," Art Cashin, director of floor operations for UBS, told CNBC.
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In further economic gloom, the Institute for Supply Management said its non-manufacturing index came in at 37.3 versus 44.4 in October,which actually helped ease some of the market anxiety.
But the drop in the ISM number raised hopes for a Federal Reserve rate cut. Fed fund futures have now fully priced in a half-percentage-point, or 50 basis-point, rate cut this month.
Elsewhere in the economy, mortgage applications staged their largest one-week surge ever, gaining 112 percent as refinancings soared 203 percent following aggressive government moves to buy mortgage-backed securities. Mortgage rates for a 30-year loan fell to 5.47 percent in November.
Shares of home builders erupted on the news, sending industry leaders Hovnanian and Lennar soaring.