Stocks lost ground in the last few minutes of the session, although remained higher, following the release of the Federal Reserve's minutes indicating the central bank would step in to stimulate the economy "before long."
The Dow Jones Industrial Average initially dipped to a 40 point loss after the news, but is now more than 20 points higher. The blue-chip index was trading above 11,000, a day after a lackluster sessionthat ended with the Dow just 3 points higher.
Bank of America Alcoa, and JP Morganrose, while Verizon, Wa-Mart and Home Depot fell.
The S&P 500 rose nearly 6 points to a five-month high, while the tech-heavy Nasdaq also gained. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 18.
Most of the key S&P 500 sectors rose, led by financials, technology and consumerstaples.
The minutes from the Federal Reserve's September meetingindicated most members of the central bank expect the economy to remain weak through 2012 and believe buying assets to stimulate the economy is warranted.
The news out of the meeting was largely as expected. Still unknown is the extent of the Fed asset buying, and when it willoccur. Many, however, expect the Fed to buy about $500 billion in assetsat the Fed's next meeting on Nov. 2-3.
Google shares rose after the search engine giant said it is using its vast database of web shopping data to construct the ‘Google Price Index’—a daily measure of inflation that could one day provide an alternative to official statistics.
In addition, Google is scheduled to report earnings on Thursday. Analysts polled by Thomson Reuters expect the firm to earn $6.69 a share, excluding expenses for employee stock compensation, on revenue of $5.27 billion, after subtracting Google's ad commissions.
Intel shares were higher ahead of the tech giant's earnings, expected after the bell tonight. Analysts expect Intel to earn 50 cents a share on revenue of $10.99 billion.
Shares of rivals SanDisk and Micron were trading higher even after the president of Samsung's chip business warned theglobal memory chip market is likely to be weak through the first half of 2011.
Apple advanced following an announcement that Wal-Mart will start selling the iPad tabletstarting this Friday. In addition, Barclays raised its price target on Apple to $385 from $340.
Wal-Mart rivals Best Buy and Target are already selling the iPad.
IAC/Interactive shares slipped more than 2 percent after Cowen cut its rating on the Internet company to "neutral" from "outperform."
Shares of RightNow Technologies jumped more than 13 percent after the software maker raised its view for third-quarter earnings, saying buisness continues to grow. Shares of rival BMC Software and Salesforce.com also rose.
Verizon shares tumbled more than 2 percent after the telecom giant was downgraded by Sanford Bernstein to "underperform" from "market perform," citing a "stretched valuation" and risk to the company's future dividend coverage. Rival AT&T was flat despite Bernstein's conclusion the wireless firm would have no trouble covering its dividend.
Deep water drilling stocks including Transocean , Noble and Diamond Offshore climbed following news that the Obama administration will lift the six-month deep water drilling moratoriumin the Gulf of Mexico imposed after the BP oil spill.
Ascent Solar Technologies jumped almost 20 percent after the thin-film solar company signed a distribution agreement with a company in the Czech Republic.
However, other energy stocks remained lower including Cabot Oil & Gas and Peabody Energy , as oil slid below $82 a barrel.
On the M&A front, King Pharmaceuticals soared almost 40 percent after news the company will be acquiredby Pfizer for $3.6 billion in cash.
And shares of Avon Products climbed on a report that L'Oreal , the French cosmetics company, may bid for the company with cash.
American Express was the top-performing Dow component after SunTrust Robinson Humphrey raised the company's stock to "buy" from "neutral."
Dupont was slightly higher after being raised to "buy" from "neutral" by Bank of America Merrill Lynch.
Nike shares hit an all-time high after the NFL announced that sportswear and equipment supplier will be the official uniform provider of the NFL beginning in April 2012.
Starbucks jumped more than 4 percent after a Sanford Bernstein analyst the coffee retailer's consumer products business, led the firm's instant coffee Via, should boost growth.
One of the worst-performing stocks in the S&P 500 was Electronic Arts as the video-game maker released the game Medal of Honor to retail stores.
Meanwhile, Fastenal fell more than 3 percent after the industrial distributor posted quarterly results that beat market estimates, helped by lower expenses and higher sales to manufacturing customers.
Railroad company company CSX is expected to report earnings after the bell. And JPMorgan is slated to kick off the big bank earnings on Wednesday morning.
Meanwhile, Treasury prices fellafter the government auctioned $32 billion of 3-year notes, which had a yield of 0.569 percent and a bid-to-cover ratio of 2.95.
Auctions of 10-year notes and 30-year bonds are expected on Wednesday and Thursday, respectively.
The dollar, which has been pressuring stocks rose earlier against the euroand a basket of currencies. The euro rose, however, after European Central Bank Governing Council member Axel Weber said the ECB's government bond-buying program has not worked.
In the day's economic news, the Conference Board's Employment Trends Index fell to 97.0 in September from a revised 97.3 in August, in a sign job growth will remain sluggish.
Also, small business owners surveyed by the National Federation of Independent Business were slightly more optimistic in September, although more plan to cut jobs than hire new workers. The NIFB optimism index edged up 0.2 points to 89.0.
Meanwhile, Kansas City Fed President Thomas Hoenig again stated he was opposed to the Fed buying more assets, calling it a "risky strategy," as he spoke before the National Association for Business Economics meeting in Denver, Colorado.
Coming Up This Week:
TUESDAY: FOMC meeting minutes; Earnings from Intel and CSX
WEDNESDAY: Weekly mortgage applications; import & export prices; 10-year note auction; Richmond Fed Pres Lacker speaks; Earnings from JPMorgan
THURSDAY: International trade; PPI; weekly jobless claims; oil inventories; 30-year bond auction; Minnesota Fed Pres Kocherlakota speaks; OPEC meeting; Earnings from Google and AMD
FRIDAY: Atlanta Fed Pres Lockhart speaks; Bernanke speaks; CPI; retail sales; Empire State mfg survey; consumer sentiment; credit card default rates reported; Earnings from GE and Mattel
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