Stocks were off their sessions high, pulling back after European markets closed but still positive after enduring days of whipsaw trading.
Wall Street moved higher Wednesday as technical trading levels held and the market received news of a big housing spike as an important tax credit expires.
Stocks also nudged higher after a Treasury auction received decent but not spectacular demand, a sign perhaps that risk was back in the market, at least for a day.
The Europe market close has been a volatile point for the past several days and today proved no exception, with US stocks briefly halving their gains. The major indexes there closed at least 1.5 percent positive.
Utilities stocks briefly turned negative and were the market's weak spot in a day when investors went bargain hunting following a 10 percent May correction.
New home sales rose 14.8 percent in April, about triple what analysts were looking for. Single family home sales totaled 504,000 for the month.
But the rebound seemed as tied to technical factors as fundamentals.
Traders were anxious to see what would happen when the S&P tested the 1060 range, and Tuesday seemed to provide affirmation that the area provided support for the broad index.
"Despite the rhetoric around how low we could go if the index settled beneath that level, it held where it needed to. Surely we cannot disregard this as being insignificant," said Rick Bensignor, chief market strategist at Execution Noble in New York. "This does not mean the bear case is gone, but it does potentially delay it."
Dow component Boeing shares gained after Morgan Stanley upgraded the company to equal weight from underweight. Transportation orders accounted for the bulk of the durable goods gains.
The last trickles from earnings season helped boost sentiment, as homebuilder Toll Brothers reported earnings of 24 cents per sharethat beat expectations and lifted shares. Builders gained more than 3.5 percent.
All 10 S&P sectors were positive, with industrials and technology leading the way. Consumer staples and telecomms also were underperforming.
Caterpillar and Merck also were at the front of the Dow 30 pack, while McDonald's and Verizon were in the red.
Automotive stocks were hot as well, with the Dow Jones US Auto Index gaining more than 5 percent. The DJ Telecomm sector was off 1.3 percent.
The dollar reversed earlier losses, edging higher against a basket of foreign currencies, while the euro continued to weaken against the greenback.
But the 3-month Libor rate stretched its streak of gains to 12 days, edging higher to 0.5378.
The fear trade evaporated, with the CBOE Volatility Index tumbling toward 30.
The rally comes as US debt excedes $13 trillion.
The market earlier received a mixed bag of durable goods newsto start the day. The headline number was up 2.9 percent, but orders for long-lasting goods actually slipped 1 percent after stripping out transportation.
"April's durable goods orders figures demonstrate that, despite the fiscal meltdown in Europe, the recovery in the American manufacturing sector is still gathering momentum," said Paul Ashworth, senior US economist at London-based Capital Economics, a firm that has an otherwise muted forecast for US growth this year.
Market breadth strongly favored gainers, which beat losers by a 10 to 1 margin.
Oil major BP saw its shares gain amid chatter that the company was about to release some positive news on its cleanup efforts in the Gulf of Mexico.
Technology company Tivo reported its fifth consecutive quarterly loss Tuesday as the pace at which it added subscribers slowed.
Zions Bancorp shares rose as Morgan Keegan upgraded the regional bank to "outperform" on belief that the worst of the company's credit and dilution issues are over.
Prudential Financial shares were higher despite investor grumblings over the firm's planned takeover of AIG's Asian business. A bullish options bet would make money if Prudential's stock hits $60.94 by the June contract expiration, according to analysts at Interactive Brokers.