The major stock averages close up just under 1%, but well off the day's highs.
Stocks gained after manufacturing data showed stabilization and follows a similiarly improved situation in Europe and Asia. Investors also cheered a fourth straight monthly rise in pending home sales. Additional reports out offered a reality check on the economy. Construction spending fell more than the market expected, and the private sector lost more jobs in June than anticipated.

Investors are likely taking the data in stride for now with the monthly U.S. jobs report due on Thursday, a day earlier than normal to accommodate for closed markets on Friday for the 4th of July holiday.

The government's monthly employment report on Thursday is expected to show that companies shed 325,000 in June and the unemployment rate rose to 9.6%, according to MarketWatch.

Wall Street got a potential snapshot of that release when an ADP report before the market opened this morning showed private companies shed 473,000 jobs in June. Although that figure was more than the Reuters average estimate for 393,000, it was less than the 485,000 jobs lost in May, and investors moved back into the market, sending all three major indexes higher, with the blue chip Dow leading.

A closely followed U.S. measure of factory activity, the Institute of Supply Management's June manufacturing gauge read 44.8 in June. That's up from 42.8 in May. A reading below 50 signifies a contraction, but the reading was higher than economists' average forecast for 44.5, according to Thomson Reuters.

Meanwhile, the Commerce Department says construction spending dropped 0.9 percent in May, nearly double the 0.5 percent decline that economists expected. Adding to the signs of weakness, activity in the past two months was revised lower.

The housing market, though, got a boost. The National Association of Realtors says that its seasonally adjusted index of pending sales increased by 0.1 percent to 90.7. Analysts expected no change, according to Thomson Reuters.

In mergers and acquisitions activity, Borland gained after Micro Focus sweetened its cash offer to $1.50 per share from $1.15 per share, topping a proposal made by an unnamed bidder last week. That deal would value BORL at $113 million. Last week, BORL said in a filing that the strategic buyer had increased its offer proposal to $1.25 in cash. The company said it had opened its books to the unnamed party for due diligence.

CombinatoRx (CRXX) jumped after the company says it will merger with privately-held Neuromed in an all-stock deal.