Dow Jones industrials rose 47.55, or 0.6 percent, to 7,837.11. The Standard & Poor's 500 index rose 9.61, or 1.2 percent, to 825.16, and the Nasdaq composite index rose 29.05, or 1.9 percent, to 1,590.66.
Wall Street broke a two-day slide Wednesday as investors cherry-picked insurance, technology and homebuilding stocks on bits of welcome news for those industries.
But jitters about weak first-quarter corporate profit reports and a downbeat assessment of the economy from the Federal Reserve held the market's gains in check.
According to preliminary calculations, the Dow Jones industrials rose 47.55, or 0.6 percent, to 7,837.11. The Standard & Poor's 500 index rose 9.61, or 1.2 percent, to 825.16, and the Nasdaq composite index rose 29.05, or 1.9 percent, to 1,590.66.
Concerns over quarterly results and company forecasts for the remainder of the year have rattled the market this week, saddling the Dow Jones industrials with a nearly 3 percent loss over Monday and Tuesday.
But analysts also said some time-out was necessary after the Dow put up its biggest four-week surge since 1933. Analysts aren't ready to call the end of the rally but trading likely will remain volatile as investors look to corporate reports and forecasts for signs of where the economy is headed.
"We're braced for a lousy earnings season because we haven't had a lot of guidance," said Frederic H. Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Ore. "We're in a volatile bottoming process."
Traders jumped on some glimmers of hope that emerged from the homebuilding and insurance industries.
A $1.3 billion deal between Pulte Homes Inc. and rival Centex Corp. announced Wednesday will create the nation's largest homebuilder. Centex jumped 18.9 percent, while Pulte fell 10.5 percent. Other homebuilders were mixed.
Insurers jumped following a report in The Wall Street Journal that the government may soon provide rescue funds to the ailing life insurance industry. An announcement could come within the next few days, the Journal said. Life insurers have been hit hard by investment losses this past year.
MetLife Inc. rose 2.4 percent, Prudential Financial Corp. gained 7.7 percent and Hartford Financial Services Group Inc. added 13.5 percent.
Technology stocks showed some of the biggest advances following an encouraging forecast from Juniper Networks Inc. The maker of equipment for computer networks said its first-quarter earnings should meet forecasts even as sales will likely fall short of expectations. Its shares jumped 12 percent.
Cisco Systems Inc. added 1.7 percent, while Microsoft Corp. gained 2.3 percent.
Some corporate news weighed on parts of the market. Ryder System Inc. tumbled $5.31, or 18 percent, to $24.25 after the truck leasing and logistics company lowered its first-quarter earnings projection. The company said the weak economy had eroded demand.
An analysts' assessment of Bank of America Corp. corralled most financial stocks. The Oppenheimer & Co. report, which the company disagreed with, predicted Bank of America will have to raise an additional $36.6 billion in capital. The stock lost 30 cents, or 4.1 percent, to $7.06. It was the steepest slide among the 30 stocks that make up the Dow industrials.
Some investors were hopeful that regulators would soon move to curb short-selling, in which traders try to profit from a stock's decline by selling borrowed shares and buying them back at a lower price.
SEC commissioners voted to open certain proposals to public debate. The group could settle on one short-selling plan among the five put forward and formally approve it sometime after a 60-day comment period.
The day also brought mixed economic news. The Commerce Department said wholesalers trimmed their inventories in February by the steepest amount in more than 17 years. But sales rose for the first time since the summer. The data signaled that companies could be getting their inventories under control.
Federal Reserve policymakers, faced with the danger of a worsening recession, decided at their March meeting to plow $1.2 trillion into the economy to drive down interest rates and entice Americans to start buying again. Minutes from the gathering revealed growing concerns about a vicious economic cycle in which rising unemployment would curtail consumer spending, potentially into 2010.
Investors had become more upbeat in recent weeks as some economic readings haven't been as bad as forecast and as governments across the globe pledged to fight the recession. Before Monday, the Dow had risen more than 20 percent from a 12-year low in early March. Stocks fell at the start of the week as investors worried that weaker-than-expected earnings and forecasts could upset the rally.
Late Tuesday, aluminum maker Alcoa Inc. said it lost nearly half a billion dollars in the first quarter, more than analysts had expected. Many saw the report as a sign of more dismal results to come.
In other trading Wednesday, the Russell 2000 index of smaller companies rose 10.42, or 2.4 percent, to 442.12.
About three stocks rose for every one that fell on the New York Stock Exchange where volume came to a light 1.32 billion shares.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.85 percent from 2.90 percent late Tuesday.
The dollar showed some strength against other major currencies. That held the price of gold to a moderate gain.
Light, sweet crude rose 23 cents to settle at $49.38 a barrel on the New York Mercantile Exchange.
Overseas, Britain's FTSE 100 slipped 0.1 percent, Germany's DAX index rose 0.8 percent and France's CAC-40 rose 0.7 percent. Japan's Nikkei stock average fell 2.7 percent.