Trading was choppy as many investors pondered their next move in advance of the third-quarter earnings season. Analysts said many were opting to hold off on major bets after six months of market gains.

"The dollar seems to be topping everyone’s list of worries, but in the big picture, it looks like a normal course of backing and filling," said Bryan Piskorowski, market commentator at Wachovia Securities. "The market has been on a tear and it needs to digest."

The Dow Jones industrial average closed up 40.63, or 0.4 percent, to 9,576.04, having lost 109 points in the previous session.

The broader market also finished higher. The Nasdaq composite index gained 27.11, or 1.5 percent, to 1,901.73. The Standard & Poor’s 500 index rose 6.22, or 0.6 percent, to 1,029.04.

Stocks have been on an upward trend since mid-March as investors grow confident of an improving economy. Some analysts believe the market is due for some pullbacks after advancing so quickly, particularly as the third-quarter season approaches.

In addition, investors are concerned a weak dollar can dampen foreign investment after finance ministers from leading industrial countries appeared to signal support for a weaker U.S. currency.

"It looks like we’re having a technical reaction after (yesterday’s) decline and a market that still wants to move higher," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc.

"We’ve also already started the earnings preannouncement season, and so far the warnings have been scant," he said. "That bodes well for the earnings season itself. But as we get into October, we’ll probably have a market that will look to sell off on the news of good earnings."

Lehman Brothers Holdings Inc. advanced 69 cents to $70.90 as the brokerage reported third-quarter profits that handily beat Wall Street’s estimates.

Morgan Stanley rose $1.18 to $52.33 as the brokerage posted a doubling in quarterly profits, citing strong performance in investment banking and capital markets.

Defense stocks took a hit after Smith Barney lowered the ratings of several companies, citing limited growth prospects. Lockheed Martin Corp. fell $1.85 to $45.97, while Northrop Grumman Corp. decreased $3.53 to $87.96.

Advancing issues outnumbered decliners 9 to 5 on the New York Stock Exchange. Volume was moderate.

The Russell 2000 index, a barometer of smaller company stocks, rose 5.71, or 1.1 percent, to 519.36.