Wall Street brushed off more bad economic news Tuesday to finish with a moderate advance that left broad stock indexes at their highest levels in two months.

Stocks gained after stumbling in the early going because of mixed readings on the service sector, factory orders and pending home sales. While investors expected the data would show further deterioration, they were hoping the pace of the declines would slow. The market is eager for signs that the U.S. recession will end this year.

Stocks recovered in midafternoon trading after the Federal Reserve released the minutes from its December meeting, providing insight into the central bank's historic decision to ratchet down its key interest rate to near zero to revive the economy.

Investors hopeful for an economic recovery moved out of sectors like consumer staples and health care that are seen as safe havens during recessions and put money into consumer discretionary names and beaten down financial stocks. Technology shares advanced in part after a Barclays Capital analyst upgraded shares of telecommunications network equipment maker Ciena Corp. Proposals by President-elect Barack Obama to help stimulate economic growth by spending on infrastructure and pushing for tax breaks helped sectors expected to benefit from a stronger consumer.

"I think people are cautiously optimistic," said Ben Halliburton, chief investment officer at Tradition Capital Management. "They are hopeful that the Obama administration is going to get the economy back on track. But I think the speed at which they get things back on track might be slower than the current consensus believes."

The Dow Jones industrial average rose 62.21, or 0.69 percent, to 9,015.10.

Broader stock indicators showed steeper advances to end at their highest levels since Nov. 5. The Standard & Poor's 500 index rose 7.25, or 0.78 percent, to 934.70. The Nasdaq composite index advanced 24.35, or 1.50 percent, to 1,652.38, helped by an 18.6 percent jump in Ciena shares.

The Russell 2000 index of smaller companies rose 9.68, or 1.92 percent, to 514.71. Smaller companies are often among the first parts of the market to advance when investors sense an econmic recovery is likely.

Advancing issues outnumbered decliners by about 4 to 1 on the New York Stock Exchange, where consolidated volume came to 5.31 billion shares compared with a light 4.76 billion shares traded Monday.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.47 percent from 2.48 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.14 percent from 0.09 percent.

On Monday, the Dow fell 81 points, giving back some of its gains from last week's rally in which all the major indexes rose more than six percent. Tuesday's climb followed a recent pattern in which investors have largely shrugged off weak economic data.

Wall Street has been showing some signs of stability since hitting multiyear lows on Nov. 20. The Dow is up 19.4 percent since then, while the S&P 500 index is up 24.2 percent. But analysts are quick to note that the market is not out of the woods yet.

"We've had sort of a positive correction," said Brian Gendreau, investment strategist at ING Investment Management. "The question is, is this the beginning of a sustained bull market? I would suspect not."

The economic numbers are mostly still poor but the stock market has recovered from past recessions before economic figures show improvement.

The National Association of Realtors said Tuesday that pending home sales fell to the lowest level on record in November, while the Commerce Department said the drop in factory orders in November was nearly twice as steep as economists had expected. In one bright spot, the Institute for Supply Management said the U.S. services sector contracted at a slower pace last month.

Analysts expect Wall Street to remain on edge in the coming weeks as corporate earnings reports begin to arrive. Investors will be looking to glean any insight into companies' expectations for the coming year.

"People are really undecided on what '09 is going to look like from an earnings perspective," said David Waddell, senior investment strategist and chief executive of Waddell & Associates. "(The market) could get a bit more pessimistic depending on how ugly the fourth quarter is. The surprise would be if things aren't as bad as we think."

Wall Street on Tuesday examined the Fed's take on whether investors can expect an economic recovery this year.

Minutes from the central bank's last meeting showed policymakers feared the economy would be stuck in a painful rut for some time. That prompted the rate cut. The Fed, which this week began buying mortgage-backed securities, also said at the time it was considering acquiring other types of securities, such as Treasurys.

"I think this statement clearly indicates they are going to continue to try to get rates lower and move people into riskier assets," said Peter Cardillo, chief market economist at Avalon Partners. "The minutes point out the fact that they are using every tool available."

Among tech stocks, Ciena rose $1.32, or 18.6 percent, to $8.40, while Hewlett Packard Co. jumped $2.98, or 8.2 percent, to $39.31.

Consumer stocks rose. Target Corp. advanced $1.97, or 5.5 percent, to $38.11. Financial stocks also gained. American Express Co. rose $1.12, or 5.6 percent, to $21.07.

Health care and consumer staples stocks slumped. Bristol-Myers Squibb Co. fell 88 cents, or 3.8 percent, to $22.35, while grocery chain Kroger Co. fell $1.31, or 4.9 percent, to $25.36.

The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude for February delivery slipped 23 cents to $48.58 a barrel on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average rose 0.42 percent, and Hong Kong's Hang Seng index dipped 0.35 percent. Britain's FTSE 100 rose 1.29 percent, Germany's DAX index added 0.85 percent and France's CAC-40 rose 1.08 percent.