The Dow Jones industrial average rose 29.63 to close at 7,037.83, erasing a 35-point drop earlier in the day. Advancers led decliners by a 5-to-4 margin on the New York Stock Exchange, with 1,430 up, 1,151 down and 796 unchanged. NYSE volume totaled 527.43 million shares vs. 459.92 million yesterday.
Broad-market indexes also ended higher, including the Nasdaq which has been battered in the last week by a selloff in technology stocks. The Standard & Poor's 500-stock list rose 1.80 to 812.08, and the NYSE composite index rose 1.04 to 425.52. The Nasdaq composite index rose 3.01 to 1,348.09, and the American Stock Exchange composite index rose 1.92 to 599.99.
Stocks started the trading day higher, adding to yesterday's drive that saw bargain hunters buying up technology stocks after several days of profit-taking.
But stocks weakened by mid-morning and spent much of the day in negative territory as the market tried to determine its short-term direction.
"We had a pretty dramatic, Hollywood-like close yesterday," said Alfred E. Goldman, vice president at A.G. Edwards & Sons Inc. in St. Louis. "Now we're seeing a pause to refresh."
By late afternoon, stocks began to bounce back, thanks to strength in bellwether technology stocks, like Intel Corp. and IBM, and retail shares, including Home Depot Inc., the Limited Inc. and Wal-Mart Stores Inc.
Investors, however, remained cautious with their trades ahead of Federal Reserve Chairman Alan Greenspan's testimony to Congress tomorrow.
"Investors are hoping that he doesn't say anything that would lead people to believe that the Fed would raise interest rates soon," said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee.
Higher interest rates hurt stocks by raising corporate borrowing costs and diminishing profits.