Investors were awaiting some economic signals for further direction—primary among them the Federal Reserve's Beige Book which provides a region-by-region assessment of the economy. Economists will look at the report for signs of recovery, with a fresh analysis suggesting that the end of negative growth is at hand.
"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."
Elsewhere in the markets, credit card stocks rose, after Citigroup upgraded MasterCard and Capital One Financial.
Also in the banking industry, Fifth Third Bancorp shares dropped. Analyst Richard Bove of Rochdale Securities initiated coverage of the company with a "neutral rating" and a price target of $11, saying the company would survive but not show a profit until 2011.
Mortgage applications jumped 17 percent to a three-month high, helping boost confidence in housing. Home builder Hovnanian saw its shares jump more than 4 percent.
After starting the day lower, crude oil prices turned positive to rise past $72, while gold traded around the $1,000 mark.
In company news, 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.
Following Tuesday's strong auction of 3-year notes, the Treasury will sell $20 billion in 10-year notes, with the results available shortly after 1 pm New York time.
Health care stocks will continue to be in focus today — they were yesterday's worst-performing S&P 500 large-cap sector — as more details on possible health care reform came to light. Famed hedge fund manager Jim Chanos told CNBC he is shorting more names in the industry regardless of whether Congress passes a plan.
President Obama has a prime time address on health care reform at 8 pm New York time, well after the markets close for the day.
- Click here for Obama heath care speech preview
Market breadth was largely positive, with gainers beating losers nearly 2 to 1. Volume was extremely light, though, with just 270 million shares changing hands in the first hour of trading on the New York Stock Exchange. There were 70 new highs and no new lows.