The market focused on economics and earnings, particularly a bright outlook from manufacturing giant 3M Co., which upped its quarterly and full-year estimates. The Commerce Department also reported that the construction sector remained healthy.

Stocks bounced around for much of the day as investors first awaited the Fed’s decision on interest rates and accompanying statement, and then fell in disappointment as the central bank confirmed the market’s assessment that job creation is lagging.

"The market was hoping that the Fed knew something that it didn’t," said Brian Pears, head equity trader at Victory Capital Management. "But they’re looking at the same data as everybody else."

But bargain hunters, keeping the upbeat economic and earnings data in mind, restored the market’s momentum late in the session.

According to preliminary calculations, the Dow Jones industrial average rose 81.78, or 0.8 percent, to 10,184.67. The Dow opened more than 100 points higher, then slid to single digits after the 2:15 p.m. Fed announcement before rallying by the end of the session.

Broader stock indicators were modestly higher. The Standard & Poor’s 500 index gained 6.43, or 0.6 percent, to 1,110.92. The tech-heavy Nasdaq composite index gained 3.88, or 0.2 percent, to 1,943.08.

The Fed said it could be "patient" in adjusting rates, the same language it used in February. But with investors worried of late about the nation’s job growth, the Fed’s statement did nothing to assuage Wall Street’s fears.

Without new jobs, the economic recovery could stall as companies try to wring more productivity out of their current operations instead of expanding.

"It’s a bit like a game of chicken," said Chris Wolfe, global head of equities for J.P. Morgan Private Bank. "Productivity will drive the economy for now, but soon investors will have to look at whether companies are making the most of their capital. And the companies are facing higher labor costs and having to decide if that’s where they want to put their money."

Buyers were cheered earlier in the day by the latest Commerce Department economic report, which said housing construction fell

4 percent in February due to harsh weather in many parts of the country, although January’s figure was adjusted upward. Even with the declines, however, both January and February’s levels of activity were still considered healthy.

"I think the market’s rebound is responding to the data we’ve received," said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons. "The bombings in Spain have taken up a lot of attention, but I think people are now starting to look at the economic data, which on balance has been positive."

3M gained $3.94 to $78.81 after it raised its earnings estimates, crediting elevated sales, favorable exchange rates and strong growth in its display and graphics division.

Mergers and acquisitions continued in the financial sector, one of the few stalwarts in recent weeks. BancWest Corp., a Hawai'i-based subsidiary of France’s BNP Paribas, said it would acquire Community First Bankshares Inc. for about $1.2 billion in cash. Community First jumped $4.11, or 15 percent, to $32.11.

Lehman Brothers Holdings Inc. gained 39 cents to $85.04 after it posted record first-quarter earnings and trounced analysts’ expectations by 54 cents per share.

Bank of America Corp. and FleetBoston Financial Corp. agreed to pay a total of $515 million to resolve allegations of improper trading of mutual funds. The two companies, set to merge in April, said they would also reduce fees investors pay by $160 million. Bank of America climbed 65 cents to $80.11, and FleetBoston rose 24 cents to $44.34.

Film studio Metro Goldwyn Mayer Inc. was up $1.95 at $18.15 after the company said it was considering paying a large, one-time dividend to investors. Media reports pegged the dividend at between $6 and $9 per share.

Earnings came in below Wall Street estimates at food producer General Mills Inc. due to charges stemming from its 2002 acquisition of Pillsbury. General Mills also predicted its 2004 earnings would fall below current estimates. Shares fell 20 cents to $46.15.

Advancing issues outnumbered decliners by nearly 3 to 2 on the New York Stock Exchange, where volume came to 1.47 billion shares, compared with 1.63 billion at the same point yesterday.

The Russell 2000 index of smaller companies fell 0.31, or 0 percent, to 566.64.