Stocks moved moderately higher as investors scooped up Internet, pharmaceutical and oil company shares at bargain prices, but the mood on Wall Street remained tense ahead of Wednesday's report on consumer prices.
The Dow Jones industrial average rose 31.66 points, to 10,594.99.
Broader stock indicators also rose slightly. The technology-heavy Nasdaq composite index rose 16.36, to 2414.67, and the Standard & Poor's 500-stock index rose 7.16, to 1301.16.
"It's the calm before the storm," said David Orr, chief economist at First Union Capital Markets Group in Charlotte.
Traders were hoping Wednesday's consumer price report for May would provide clues about inflation and whether the Federal Reserve will raise interest rates to slow the economy's growth when its Federal Open Market Committee meets June 29-30.
The market was also looking forward to Fed Chairman Alan Greenspan's testimony before Congress on Thursday for hints about what action the Fed might take.
The stock market, worried that higher rates will hurt corporate profits, has been nervous ever since the April consumer price index, released May 14, showed its highest increase in nine years. Days later, the Fed announced it was leaning toward increasing interest rates if necessary to stifle inflation.
A 309-point drop in the Dow last week reflected the market's expectation that rates will indeed rise.
A strengthening bond market prodded stocks higher for much of today's session, until Treasury prices fell late in the day. The benchmark 30-year bond yielded 6.11 percent, up from 6.09 percent on Monday but still lower than the 19-month high of 6.16 percent on Friday. The bond's price, which moves in the opposite direction, fell $1.86 per $1,000 in face value.
Meanwhile, Internet stocks, some of which have seen their prices fall by nearly half since April, recouped some of their losses. Those gaining ground included America Online, up 4 1/4 at 94 3/4, Amazon.com, up 4 1/2 at 96 1/2, and Yahoo, up 6 at 125 1/4. Still, analysts said they expect the correction in Internet issues to continue.
Several big pharmaceutical stocks, which also have been battered since April, were picked up by bargain hunters. Pfizer rose 2-7/16, to 97-9/16; Merck rose 1 3/8, to 67 5/8; and American Home Products rose 1-3/16, to 53 1/2.
Oil stocks were led by Dow components Exxon, up 1 at 82 1/8, and Chevron, up 1 1/4 at 96.
But Coca-Cola, another Dow stock, fell 1-1/16, to 63 3/4, after Belgian officials banned sales of the company's soft drinks amid reports of people becoming ill after drinking them.
Advancing issues outnumbered declining ones by about 6 to 5 on the New York Stock Exchange, where trading volume totaled 696.7 million shares, up from 669.4 million on Monday.
The NYSE composite index rose 2.68, to 622.28; the American Stock Exchange composite index rose 1.23, to 763.92; and the Russell 2000 index of smaller companies rose 2.48, to 434.01.