Market Snapshot September 9, 2009, 4:45PM EST

Stocks End Higher

The Fed's Beige Book said the economy is stabilizing, but labor markets are still weak. Gold prices fell on profit taking

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Stocks closed higher, but off the best levels of the day after the Federal Reserve's Beige Book report said the economy is stabilizing, but also cited continuing labor market weakness and flat retail sales.

This afternoon's Beige Book, which the Fed will use for the Sept. 22 FOMC meeting, said economic activity continued to "stabilize" in July and August -- a more upbeat assessment than the prior reports that said the pace of declines was moderating, says Action Economics. "However, there were still a lot of "weak" and "soft" adjectives seen, leaving the report more mixed than suggested by the headlines," says Action Economics.

The outlook for the economy from most Fed districts was cautiously optimistic, says Action Economics. The majority of Districts reported flat retail sales, with the "cash for clunkers" boosting auto sales. Improvement was noted in home sales, though downward price pressures were generally seen, while commercial real estate markets remained weak. Also, loan demand was described as weak, with credit standards still tight. Labor market conditions also remained weak, though some areas reported a pick up in demand for temporary help. Wage and price pressures remained minimal across all Fed districts, says Action Economics.

In a speech in New York, former Fed Chairman Alan Greenspan said the U.S. economy will start to pull out of a recession by yearend, helped by "remarkable growth" in productivity and a depletion of inventories. "A lot of pieces are falling into place for recovery," Greenspan said. He predicted "a fairly pronounced recovery not only in the U.S.," but globally.

On Wednesday, the 30-stock Dow Jones industrial average rose 49.88 points, or 0.53%, to 9,547.22. The broad Standard & Poor's 500-stock index gained 7.98 points, or 0.78%, to 1,033.37. And the tech-heavy Nasdaq composite index advanced 22.62 points, or 1.11%, to 2,060.39.

In the commodities markets, gold prices fell $7.10 to $990.80 after hitting a high of $1,009 on Tuesday. Crude oil futures were slightly higher, up 32 cents to $71.42, amid reports OPEC ministers will not change quotas or output goals at their Vienna meeting.

The dollar index slipped to 77.08. Bloomberg News reported some investors, such as the George Washington University endowment fund, are increasing holdings of commodities such as oil and natural gas out of concern that a return to inflation rates last seen in the 1970s may ravage the value of its $1 billion endowment. Bloomberg also reports UBS AG, the world's second-largest currency trader, lowered its forecasts for the dollar against currencies such as the euro and the pound, citing improving risk appetite and gains in stocks

Treasuries were mixed after a 10-year note auction; the 10-year note yield settled at 3.479%.

Among stocks in the news Wednesday, Apple (AAPL) shares were lower after the company unveiled some new products. It also announced price cuts to existing iPod Touch models. Apple CEO Steve Jobs took the stage at its San Francisco event for the first time since his nearly six-month-long medical leave.

Palm (PALM) shares fell after the company introduced its Palm Pixi phone. Credit Suisse downgraded the stock to neutral from outperform.

Industrial conglomerates such as General Electric (GE) rose after Goldman Sachs raised its view on the U.S. multi-industry group to attractive from neutral. Goldman raised target prices on GE and 3M (MMM), and upgraded Illinois Tool Works (ITW) to conviction buy from neutral.

Capital One Financial (COF) moved up after Citi Investment Research upgraded the stock to buy from hold, citing an expected improvement in credit losses. Citi also raised its price target to $44 from $28.