Investors were also watching developments in Washington to see whether U.S. lawmakers could avert a government shutdown.

The recent move in Treasury yields to 16-year highs has loomed over the stock market, which has pulled back after the Federal Reserve last week signaled a hawkish long-term outlook for interest rates.

The benchmark 10-year Treasury yield pausing at around 4.6% was bringing "relief," said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management Co.

"Markets in general the last few days have been really, really choppy," said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management Co.

"A little bit of a counter trend rally is to be expected after three or four pretty sharply negative days.”

According to preliminary data, the S&P 500 gained 24.75 points, or 0.58%, to end at 4,299.26 points, while the Nasdaq Composite gained 107.33 points, or 0.82%, to 13,200.18. The Dow Jones Industrial Average rose 116.13 points, or 0.32%, to 33,659.20.

Among S&P 500 sectors, communication services and materials groups rose. The rate-sensitive utilities sector sank, continuing its recent slide.

Data showed the U.S. economy maintained a fairly solid pace of growth in the second quarter.

Separate readings showed initial jobless claims rose slightly last week and a higher-than-expected fall in contracts to buy existing homes in August.

Investors were looking ahead to Friday's personal consumption expenditures price index for the latest view on inflation.

“This is the most important U.S. datapoint this week, and there is a growing anticipation that it won’t run hot,” said Kristina Hooper, chief global market strategist at Invesco.

In Washington, the Democratic-led U.S. Senate forged ahead with a bipartisan stopgap funding bill aimed at averting a fourth partial government shutdown in a decade. The House of Representatives prepared to vote on partisan Republican spending bills with no chance of becoming law.

In company news, Micron Technology shares dropped after the chip company forecast a bigger loss than analysts had expected.

Accenture shares slumped after the IT services firm forecast full-year earnings and first-quarter revenue below Wall Street targets.