The drop in oil prices — coming as the U.S. government reported a larger-than-expected stockpile of oil and gasoline — removed a key obstacle for stocks to move higher. A barrel of light crude settled at $50.45, down $1.62, on the New York Mercantile Exchange.

The news about the trade deficit, which shrank to its lowest level in six months, also encouraged investors who had feared an economic slowdown. However, Michael Murphy, managing director at Wachovia Securities in Baltimore, noted that while the day's economic and corporate news was generally good, news of late has been mixed, and most buyers are waiting for a clear signal to get into the market.

"People are very hesitant right now to pull the trigger," Murphy said.

The Dow Jones industrial average rose 19.14, or 0.19 percent, to 10,300.25.

Broader stock indicators also moved higher. The Standard & Poor's 500 index was up 4.89, or 0.42 percent, at 1,171.11, and the Nasdaq composite index gained 8.78, or 0.45 percent, to 1,971.55.

Stocks took a sharp dive around midday after the White House and Capitol were evacuated due to an off-course aircraft. Once the plane was successfully diverted away from Washington, the major indexes began to slowly move higher.

Contributing to investors' uncertainty were comments by Federal Reserve Bank of St. Louis President William Poole, a member of the Fed's rate-setting committee. He was quoted by Dow Jones Newswires as saying the Fed's stated intent to raise rates at a measured pace "should not be viewed as an iron clad commitment."

The statement, while nuanced, raised the specter of stagflation, a situation in which inflation rises even as economic growth starts to slow, and which could still force the Federal Reserve to raise interest rates.

The Commerce Department reported that the nation's trade deficit fell sharply in March as U.S. exports climbed to an all-time high, good news for exporting companies. The surge of textile shipments from China slowed. The deficit narrowed by 9.2 percent to $54.99 billion, down from the record monthly deficit of $60.57 billion set in February.

Late yesterday, Cisco reported earnings for the latest quarter, excluding special items, of $1.5 billion, or 23 cents per share, beating Wall Street analysts' expectations by a penny a share. The maker of data networking gear also said its third-quarter sales jumped more than 10 percent, and it expects sales to grow this quarter. Cisco was up 34 cents at $18.55.

The Dow fell 103.23, or 0.99 percent, yesterday amid rumors that some hedge funds may have been whipsawed last week, when investor Kirk Kerkorian announced an offer for General Motors Corp. stock and Standard & Poor's downgraded the Dow component's bonds to junk status. Massive losses at hedge funds could force them to liquidate holdings, flooding the market. GM stock fell 53 cents to $31 today.

Neil Massa, equity trader at John Hancock Funds in Boston, said fears surrounding the hedge funds were still weighing on the market today.

"The Cisco earnings we kind of thought would be the catalyst to get the market higher, but it turned out to be a nonevent ... There's a real disconnect now between the fundamentals that we're getting in the marketplace and the sentiment," Massa said.

Eastman Kodak Co., in the midst of a difficult transition from film-based photography to digital, rose $1.13 to $26.58 after it said Chief Executive Daniel Carp would step down in favor of his second-in-command, Antonio Perez.

Leading Internet music retailers were down sharply after Yahoo! Inc. said would launch a subscription-based music store with prices that undercut competitors substantially. RealNetworks Inc. plunged 21.1 percent, or $1.54, to $5.76, Napster Inc. tumbled 26.8 percent, or $1.70, to $4.65 and Apple Computer Inc. fell 81 cents to $35.61. Yahoo! rose 82 cents to $34.88.

The Walt Disney Co. reported strong gains in quarterly revenues and earnings and beat Wall Street's profit forecasts by a penny per share, but the company's stock fell 28 cents to $26.67.

Advancing issues barely outnumbered decliners on the New York Stock Exchange, where volume was to 1.41 billion shares, compared with 1.48 billion on Tuesday.

The Russell 2000 index of smaller companies was up 0.53, or 0.09 percent, at 595.57.

Overseas, Japan's Nikkei stock average fell 0.4 percent. In Europe, Britain's FTSE 100 was down 0.35 percent, Germany's DAX index was down 0.16 percent, and France's CAC-40 was down 0.52 percent.