The tech-heavy Nasdaq composite index rose 38.09 to 1,498.80. The blue-chip Dow Jones industrial average gained 166.14 to 8,847.56. Both indexes had fallen sharply since the terrorist attacks on the World Trade Center and the Pentagon on Sept. 11.
Fund managers took heart from a barometer of manufacturing activity in the Chicago area, which rose in September. The National Association of Purchasing Management-Chicago said its Business Barometer rose this month to a seasonally adjusted 46.6 from 43.5 in August. An index below 50 signals a contracting manufacturing economy. Still, the gain came as a surprise to analysts, who on average had estimated the barometer would fall to 40.7.
The U.S. gross domestic product grew by 0.3 percent in the second quarter--higher than the 0.1 percent gain expected by economists--according to the Commerce Department's third and final reading, but analysts noted that period preceded the attacks on New York and Washington.
Technology bellwethers led the Nasdaq's gains. Cisco Systems rose 94 cents, or more than 8 percent, to 12.18 as the most active stock on U.S. markets.
Microsoft picked up $1.21 to $51.17. The federal judge overseeing the company's antitrust trial pushed both Microsoft and the government to continue settlement talks.
Intel slid 16 cents to $20.39 after Merrill Lynch lowered its forecast for PC sales this year. Also falling was EMC, down 14 cents to $11.75, on ongoing worries about an accelerated slowdown in business since the terrorist attacks.
Among other heavily traded tech stocks, Sun Microsystems rose 36 cents to $8.27, Oracle advanced 54 cents to $12.58, and JDS Uniphase gained 29 cents to $6.32. WorldCom rose 56 cents to $15.04, and Nextel Communications picked up 69 cents to $8.64.
Staff and Reuters contributed to this report.