The Dow Jones Industrial Average advanced 57.50, or 0.5 percent, to 10,635.25, with Procter & Gamble accounting for one- fourth of the gain. The Standard & Poor's 500 Index climbed 4.74, or 0.4 percent, to 1170.29. The Nasdaq Composite Index rose 3.81, or 0.2 percent, to 1880.87.

The S&P 500 pared a 0.7 percent gain after the Federal Reserve dropped its view that weakness is the biggest threat to the economy. That suggests the central bank may raise interest rates later this year to keep faster growth from spurring inflation.

Data compiled since the last Fed meeting show the economy "expanding at a significant pace," the central bank said.

The bond market had anticipated a change in the Fed's stance on the economy by pushing borrowing costs higher, and that took the edge off of today's meeting, Castellini said. The yield on the 10-year Treasury note last week touched an eight-month high, after rising half a percentage point in two weeks.

"Almost every market strategist coming into this had said the Fed would go to a more neutral posture and leave rates unchanged, and that's exactly what happened," said Bill Barker, investment consultant at RBC Dain Rauscher. "Maybe we'll see a rate hike at the next meeting or in June, but there's still enough uncertainty out there for them to wait."

In a statement issued after its regularly scheduled meeting, the Federal Reserve was cautious, however, noting that "the (economy's) degree of strengthening ... is still uncertain."

The Fed cut rates 11 times in 2001 in an aggressive effort to stimulate growth and help the economy emerge from recession. It will start raising rates when it believes business is strengthening, so that growth occurs at a reasonable, sustainable rate.

In trading today, Goldman Sachs rose $1.85 to $91.05 after reporting first-quarter results well above analysts' expectations.

Procter & Gamble advanced $2.28 to $89.94 after it boosted its forecast for the third quarter and fiscal year.

Tech stocks were more mixed. Intel rose 10 cents to $31.72, while Nokia dropped 68 cents to $21.73.

Hewlett-Packard fell 45 cents to $18.80 after its chief executive Carly Fiorina said it had won a closely contested shareholder vote to approve its merger with Compaq. The official results of the vote were not expected to be available for days. Compaq gained 65 cents to $11.01.

HP is a Dow stock, and its decline late in the session limited the average's gains.

Stocks have been steadily advancing all month, although the pace has slowed in recent sessions as investors try to assess whether company profits will be strong enough to justify the gains.

Wall Street is interested in first-quarter earnings reports, which begin next month. If the results are stronger than expected and companies' forecasts are bullish, stocks could rise even more. Disappointing reports might prompt investors to pull back.

"What you have is a moderate market trying to garner strength from data that's coming down the pipe," said Bryan Piskorowski, market commentator at Prudential Securities. "The problem is that Wall Street has a tendency to bake a lot into the cake, and I think a lot of that data or any good news might already be discounted into stock prices."

Also, a Commerce Department report showed that the U.S. trade deficit swelled to $28.5 billion in January because of increased oil imports and the lowest level of exports in more than three years.

Advancing issues led decliners 8 to 7 the New York Stock Exchange. Volume came to 1.24 billion shares, compared with