Wall Street has been showing some signs of stability since hitting multiyear lows on Nov. 20. The Dow is up 19.4 percent since then, while the S&P 500 index is up 25.6 percent. But analysts are quick to note that the market is not out of the woods yet.

"We've had sort of a positive correction," said Brian Gendreau, investment strategist at ING Investment Management. "The question is, is this the beginning of a sustained bull market? I would suspect not."

The economic numbers are mostly still poor but the stock market has recovered from past recessions before the economic figures show improvement.

The National Association of Realtors said Tuesday that pending home sales fell to the lowest level on record in November, while the Commerce Department said the drop in factory orders in November was nearly twice as steep as economists had expected. In one bright spot, the Institute for Supply Management said the U.S. services sector contracted at a slower pace last month.

Analysts expect Wall Street to remain on edge in the coming weeks as corporate earnings reports begin to arrive. Investors will be looking to glean any insight into companies' expectations for the coming year.

"People are really undecided on what '09 is going to look like from an earnings perspective," said David Waddell, senior investment strategist and chief executive of Waddell & Associates. "(The market) could get a bit more pessimistic depending on how ugly the fourth quarter is. The surprise would be if things aren't as bad as we think."

Wall Street on Tuesday examined the Fed's take on whether investors can expect an economic recovery this year.

Minutes from the central bank's last meeting showed policymakers feared the economy would be stuck in a painful rut for some time. Fed Chairman Ben Bernanke and his colleagues slashed the central bank's target lending rate to help spur economic growth.

The Fed, which this week began buying mortgage-backed securities, also said at the time it was considering acquiring other types of securities, such as Treasurys.

"I think this statement clearly indicates they are going to continue to try to get rates lower and move people into riskier assets," said Peter Cardillo, chief market economist at Avalon Partners. "The minutes point out the fact that they are using every tool available."

Among tech stocks, Ciena rose $1.32, or 18.6 percent, to $8.40, while Hewlett Packard Co. jumped $2.98, or 8.2 percent, to $39.31.

Consumer stocks rose. Target Corp. advanced $1.97, or 5.5 percent, to $38.11. Financial stocks also gained. American Express Co. rose $1.12, or 5.6 percent, to $21.07.

Health care and consumer staples stocks slumped. Bristol-Myers Squibb Co. fell 88 cents, or 3.8 percent, to $22.35, while grocery chain Kroger Co. fell $1.31, or 4.9 percent, to $25.36.

The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude for February delivery slipped 23 cents to $48.58 a barrel on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average rose 0.42 percent, and Hong Kong's Hang Seng index dipped 0.35 percent. Britain's FTSE 100 rose 1.29 percent, Germany's DAX index rose 0.85 percent and France's CAC-40 rose 1.08 percent.

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