Stocks closed higher after the Federal Reserve held benchmark rates near zero and renewed its pledge to keep them exceptionally low for an extended period.
The Fed's announcement gave a lift to an otherwise lethargic day of trading in which materials stocks rose on some mildly good news in the housing industry and health care lagged as Congress continues to grapple with its controversial reform bill.
The central bank pointed to increased momentum in the economy's recovery, indicating it may be moving closer to dropping its promise to keep borrowing costs near zero and rate hikes could be on the horizon.
"The market was excited that they didn't change language this time," said Burt White, managing director and chief investment officer of LPL Financial in Boston. "This is exactly what the market was hoping for, was the Fed to kick the can down the road and wait for another day."
Earlier in the session, stocks moved higher after Standard & Poor's ended its review for a downgrade of Greece, saying the government's recent deficit-reduction measures are supportive of the ratings.
Concerns about Greek debt have been a drag on equities in recent weeks.
"This is better than a lot of people were expecting, and it seems to take impending risk off the table, removing an overhang for the stock market," said Jack Ablin, chief investment officer of Harris Private Bank in Chicago.
Intel was one of the top gainers on the Dow. Its shares rose as the company released its newest chips for servers ahead of rival Advanced Micro Devices. These are the first of a new generation of powerful chips that push performance while increasing energy efficiency.
Investors took some comfort from economic reports showing the drop in new housing starts and building permits about in line or even slightly better than expected. Housing and employment are the two main hurdles for the economy to cross yet.
In line with the positive housing numbers, materials stocks led gainers on the S&P 500, while health care and telecom were laggards.
After floating around unchanged for the day, the major averages closed a bit higher in extremely light trading, keeping in line with the string of modest gains over the past six sessions.
Goldman Sachs said there is a 50 percent chance that health care legislation will be passed and thus changed its ratings on several companies in the sector, increasing its exposure to smaller companies and cutting managed care.
Goldman downgraded Boston Scientific to "conviction sell" from "neutral," sending its shares lower. It also upgraded Coventry Health Care to "neutral" from "conviction sell."
General Electric gained 2.2 percent after the Dow component's chief financial officer said he expects the company's earnings and dividend to rise in 2011.
The CNBC.com parent led Dow gainers, while Boeing led decliners on the bluechip index.
Cliffs Natural Resources surged as fertilizer stocks have been gaining since Potash raised its earnings expectations.
Coal stocks also gained after Barclays raised its price target for companies in the sector. Patriot Coal was among the the strongest performers in the group.
Harley-Davidson also was attracting strong volume from traders as shares gained more than 5 percent.
On the downside, Movado shares tumbled a day after the luxury watch maker said it expects to post a fourth-quarter loss.
China said Google should obey Chinese government rules even if it shuts down its Chinese Web site. Google shares have been falling on increasing signs that it's planning to pull out of China in a dispute over censorship.
And Limited Brands announced a $1 a share special dividend and authorized a $200 million share repurchase program.
Volume was anemic, with barely over 1 billion shares changing hands on the New York Stock Exchange. Market breadth was strong positive, however, with gainers beating losers about 2.7 to 1.
—Reuters contributed to this report.