Greenspan's testimony before the Senate Banking Committee, in which he praised the economy's overall health, cheered investors somewhat. However, the Fed chairman did warn again that the central bank would keep a close eye on prices and inflation, and would aggressively raise interest rates if need be.

Because Greenspan's message was mixed, it couldn't help the market find a direction; Wall Street has seen mostly sluggish trading in an uninspiring earnings season, and the major indexes were again trapped within a fairly narrow range today.

"Unfortunately right now, I think investors need time to get acclimated to the economic environment going forward, rising rates, the earnings growth slowdown, things like that," said Scott Wren, equity strategist for A.G. Edwards & Sons. "I don't think earnings will be the story here unless they really disappoint. It's purely a matter of time for us to break out of this slump."

According to preliminary calculations, the Dow Jones industrial average rose 55.01, or 0.6 percent, to 10,149.07.

Broader stock indicators were markedly higher. The Standard & Poor's 500 index was up 7.77, or 0.7 percent, at 1,108.67, while the Nasdaq composite index advanced 33.24, or 1.8 percent, to 1,917.07.

Greenspan's testimony came after a disappointing housing report from the Commerce Department. Construction began on 1.8 million units in June, an 8.5 percent drop from May and the lowest level in more than a year. Combined with rising interest rates, a dip in consumer spending and profit warnings from major corporations for the rest of the year, the lack of activity in the construction sector gave investors more to worry about.

"Investors are really looking for a sign of things to come right now, and they're not getting it in earnings," said Brian Pears, head equity trader at Victory Capital Management. "The market, barring that one big bellwether diversified company that says something big, doesn't have a direction, and that explains the lack of conviction we've seen over the past couple of weeks."

Many investors were on the sidelines, waiting to see Microsoft's earnings, to be released late Thursday. After the regular session ended today, the software maker announced a special one-time dividend of $3 per share and also said it would double its annual dividend to 32 cents per share. Microsoft, which finished the regular session up 37 cents at $28.32, surged another 78 cents in extended trading.