The Dow closed positive as consumer and health care stocks rose, though weakness in technology and banks prevented larger gains.
The lackluster trading day had threatened to give Wall Street its second consecutive day of losses with banks pointing the way lower. However, JPMorgan fought for higher ground in afternoon trading and others in the sector were off their lows for the day.
Consumer and health care stocks led the charge for positive ground.
Health-care leaders Pfizer and Merck helped boost the Dow, while Kraft Foods also gained on the bluechip index.
Banks were responsible for much of the market gyrations.
Overall, the KBW Bank Index was off more than 4 percent, limiting gains for the broader market. Options traders took bearish positions in the SPDR Financial Select ETF , reflecting unease about the industry's long-term prospects.
"The stress test results are out of the bag and priced into the market, and we continue to observe many pessimistic option traders on financials," Andrew Wilkinson, senior market strategist at Interactive Brokers, wrote in a note to clients.
Citigroup shares slipped after saying it was using $45 billion in Troubled Asset Relief Program (TARP) funds to make new loans.
Bank of America also edged lower following its announcement it will sell $7.3 billion of its stake in China Construction Bank.
Bank of New York Mellon slipped after raising $1.2 billion in new shares at $28.75. The drop, though, mostly reflected the offering price.
And US Bancorp shares fell after the company filed a prospectus with the Securities and Exchange commission saying it planned to sell up to $1 billion in senior notes but did not detail how it planned to use the money.
The sense of unease came as Atlanta Federal Reserve Bank President Dennis Lockhart said market conditions for financials was better than at the height of the credit crisis last year but the problems are far from over.
"I believe that conditions are now calmer but it is too soon to breathe easy," he said in remarks to a conference organized by his institution.
Outside the sector, Ford Motor shares fell after the automaker said it will sell 300 million common shares, in part to raise cash to pay off health-care obligations.
And General Motors shares tumbled as the company continues its seemingly inexorable trudge towards bankruptcy. Six GM executives revealed after the bell Monday they dumped direct holdings in the company, shedding $315,000 in common stock.
On the Nasdaq tech gauge, Yahoo and Starbucks both dropped as short interest in the two companies grew in the second part of April. Apple also accounted for much of the index's losses.
Semiconductor firm Nvidia also saw its shares continue to slip off a weak earnings report last week.
Oil prices mirrored the growth in stocks, with the price of US light, sweet crude touching the $60 mark at one point.
In economic news, a government report showed the US trade deficit growing to $27.6 billion, somewhat lower than expected and raising concerns about consumer weakness reflected in decreasing demand for foreign goods.
Other big movers for the day:
Federal Agricultural Mortgage , a government sponsored enterprise along the lines of Fannie Mae and Freddie Mac, posted earnings reversing a prior-year loss and said its capital surplus exceeds $67 million, compared with $13 million at year's end, sending shares soaring. The company, also known as Farmer Mac, buys loans made to farmers and ranchers.
In the energy industry, shares of Foundation Coal Holdings soared on news it was being purchased by Alpha Natural Resources in a $2 billion stock deal.
Life insurance distributor National Financial swung to a loss on a $607.3 million impairment charge, sending its shares sharply lower.
Market breadth was negative, with losers beating gainers on the New York Stock Exchange less than 1.5 to 1 on fairly light volume of about 1.3 billion shares.