According to preliminary results, the Dow Jones industrial average rose 62.59, or 0.59 percent, to 10,673.79, following a 174-point slide Tuesday. Analysts said a reflex rally was to be expected after the previous session, which most thought had been oversold.

The broader gauges were also higher. The Standard & Poor's 500 index gained 6.64, or 0.56 percent, to 1,190.80. The Nasdaq composite index was up 0.93, or 0.05 percent, at 2,031.25.

"Judging by conversations with our clients, people were looking to re-engage," said Brian G. Belski, market strategist at Piper Jaffray. "If we'd had a stronger semblance of inflation, this thing could've really come uncoupled today."

The Labor Department reported a tiny 0.1 percent rise in its Consumer Price Index for January, as energy costs slid for a second straight month. The data, which suggests consumer inflation remains very much under control, was at odds with Friday's reading of the Producer Price Index, which showed higher inflation for wholesale goods. While the discrepancy was puzzling to some, it provided a needed lift for stocks.

"We'll just call this 'better than yesterday,'" said Arthur Hogan, chief market analyst at Jefferies & Co. in Boston. "Last week we got the surprise in the PPI and we didn't get the corresponding surprise in the CPI, which means the raw material costs are not being passed on to the end user with the finished goods, so that's good news on the inflation front. That makes us less worried the Federal Reserve will need to step up its rate tightening."

Treasuries rallied on the inflation data, sending the yield on the 10-year note to 4.26 percent, down from 4.29 percent late Tuesday. The newly released minutes of the Fed's Open Market Committee's policy meeting, held earlier this month, inspired further buying.

The dollar, which tumbled Tuesday on rumors that South Korea planned to diversify its currency holdings away from the greenback, recovered somewhat after Seoul's central bank denied the report. Gold fell, as did oil prices, which skidded 25 cents to $51.17 per barrel on the New York Mercantile Exchange.

Toll Brothers Inc. rose 4 percent, or $3.21, to $84.25, as soaring demand for luxury homes boosted profits in the first quarter, prompting the company to raise delivery estimates for 2005. Its earnings blew past the estimates of analysts surveyed by Thomson First Call.

Lowe's Cos. was up 37 cents at $57.90 after the nation's second-largest home improvement chain reported a nearly 27 percent rise in fourth quarter earnings on an almost 18 percent increase in sales. The results beat Wall Street's expectations by a wide margin, but forecasts disappointed investors.

Chiquita Brands International Inc. was up 5 cents at $22.05 after the banana grower announced plans to acquire Fresh Express, the nation's top seller of bagged salads, from Performance Food Group Co. for $855 million in cash. The announcement came a day after Chiquita reported its profit more than tripled in the fourth quarter.

Pharmacy benefits manager Medco Health Solutions Inc. was down 29 cents at $43.14 after saying it had agreed to buy Accredo Health Inc., a distributor of specialty drugs and services, for about $2.2 billion in cash and stock. The deal would create the nation's largest specialty pharmacy business, Medco said. Accredo shares surged 39 percent, or $11.87, to $42.11.

Trucking company USF Corp. jumped 13 percent, or $4.37, to $37.73, after The Wall Street Journal reported that Yellow Roadway Corp. was in talks to acquire it in a deal possibly valued at more than $1 billion. Yellow shares added 4.7 percent, or $2.60, to $57.95.

Advancers outnumbered declining issues by about 2 to 1 on the New York Stock Exchange.

The Russell 2000 index, which tracks smaller company stocks, was up 2.61, or 0.42 percent, at 620.54.