Stocks closed higher after faltering for awhile on a Federal Reserve report that the economy will remain weak due largely to unemployment.
Major indexes regained most of the ground they lost when the Fed's Beige Book called its outlook "cautiously positive" but noted a generally pessimistic mood regarding car sales and commercial real estate.
Investors responded by retreating from positions in a market that was lifted through most of the day by strength in commodities, industrials and technology.
The Fed's report was somewhat at odds with a growing consensus that the economy is out of recession and on the path to recovery.
"The US manufacturing sector expanded in August, the first month of expansion since January 2008," noted analysts at Bank of America-Merrill Lynch Securities in a research note. "We believe this rebound represents the leading edge of the US recovery. It is consistent with our view that Q2 will mark the last quarter of negative growth in this economic cycle before the economy begins to expand driven by inventories, housing and trade."
The market trimmed gains in crude oil , which at one point was above $72, and gold , which waffled around the $1,000 mark.
The Nasdaq also trimmed gains when Apple turned negative following a product launch event that featured a speech from founder Steve Jobs.
The tech index had been up more than 1 percent earlier as Vivus soared after the company said a trial found that patients on the company's obesity drug, Qnexa, lost 14.7 percent of their body weight.
Starbucks was among the index's leading advancers after the coffee store chain said it had decided to take 30 stores off a closure list after the locations posted stronger sales.
Also, eBay benefited from an analyst upgrade at Bernstein, which raised the price target of the online retailer to $28 from $24.
The market had little reaction to a decent Treasury auction of $20 billion in 10-year notesthat saw a high yield of 3.51 percent.
The day's gains were spread across the spectrum.
A senior executive at Boeing said the aerospace giant expects global air cargo traffic to return to growth next year, sending shares higher. The company led the Dow 30 index gainers.
Shares also gained for General Electric , which Goldman Sachs upgraded. It was the second upgrade in as many days for the CNBC.com parent. The industrial sector was upgraded as a whole, sending many of its components higher.
Elsewhere in the markets, credit card stocks rose, after Citigroup upgraded MasterCard and Capital One Financial.
Shares of McDonald's fell after the company said same-store sales rose 2.2 percent globally, helped by strength in Europe. The company was among the biggest drags on the Dow.
DuPont also hurt the bluechip index following an analyst downgrade at Goldman Sachs, which cut the company to neutral from buy.
Market breadth was positive, with gainers beating losers nearly 2 to 1. Volume was light, though, with just 840 million shares changing hands heading into the final hour on the New York Stock Exchange. There were 139 new highs and no new lows.