NEW YORK — Wall Street managed a moderate gain in an erratic session Wednesday as investors sorted through a downbeat Federal Reserve assessment of the economy and were also disappointed by a plan to bail out troubled bond insurer Ambac Financial Group Inc.

The Fed's Beige Book report on regional economies indicated growth at the start of the year was sluggish and accompanied by rising price pressures. The report also cited tighter credit standards.

Meanwhile, Ambac said it plans to issue more than $1 billion in common stock to help shore up its battered balance sheet. Investors had hoped for a contribution from global banks to help Ambac, whose plan will dilute its outstanding shares.

Investors remain nervous about how the fallout from the global credit crisis will hurt financial companies. Recent speculation that Citigroup Inc. might log significant write-downs from exposure to subprime mortgage-related securities only exacerbated those fears.

"I think it's more the Ambac" news, said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams, said referring to traders' expectations about a bailout for the bond insurer. That's just not what they were looking for."

The Dow Jones industrials were up as much as 120 points earlier in the session after a stronger-than-expected reading on the health of the service sector and figures on worker productivity calmed fears about the economy.

According to preliminary calculations, the Dow rose 41.19, or 0.34 percent, to 12,254.99.

Broader stock indicators were higher. The Standard & Poor's 500 index added 6.95, or 0.52 percent, to 1,333.70, while the Nasdaq composite rose 12.53, or 0.55 percent, to 2,272.81.