Meanwhile, Motorola rose $1.27, or 6.9 percent, to $19.58, after Icahn revealed his stake in the cell phone maker and expressed interest in joining the board.

Consumer products maker Procter & Gamble Co. said higher sales of Gillette razors and Tide detergent helped fiscal second-quarter profit jump 12 percent. However, shares fell 29 cents to $64.59.

Merck & Co. fell 60 cents to $44.91 after the drug company posted a 58 percent decline in quarterly profit. The company was hurt by restructuring charges and increased legal reserves linked to the withdraw of the painkiller Vioxx.

3M Inc., which makes products such as Post-It notes and Scotch tape, had profit that jumped 58 percent after taking a large gain on the sale of its pharmaceutical business. However, the company — often considered a barometer of U.S. business health because of the products it sells — missed Wall Street expectations after stripping out that gain. Its shares fell $4.26, or 5.4 percent, to $74.70.

Goldman said the Dow would be about 30 points higher if it weren't for 3M's disappointing results. Overall, corporate earnings have been coming in fairly strong.

"Fourth-quarter earnings are running 10.5 percent ahead of last year. It's a good increase, but we've been spoiled," Goldman said, noting that investors grew accustomed to higher double-digit earnings last year, but that the average gain is about 7 percent.

"On balance, earnings have been coming in somewhat better than expected. Secondly, the consumer confidence figures from the Conference Board were encouraging," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors.

He added that gains were held in check, though, by worries about the statement that will accompany Fed policy makers' decision on Wednesday.

"It appears to me as though the economy is stronger than they expected, and many governors have stated concerns about inflation," Johnson said. If that is reflected in Wednesday's statement, he said, it may be difficult for the stock market, as a rate hike later in the year could curb consumer spending.

The Russell 2000 index of smaller companies rose 4.87, or 0.61 percent, at 797.97.

Advancing issues led decliners by more than 2 to 1 on the New York Stock Exchange, where volume came to 1.53 billion shares.

Overseas, Japan's Nikkei stock average rose 0.11 percent. Britain's FTSE 100 rose 0.03 percent, Germany's DAX index rose 0.93 percent, and France's CAC-40 gained 0.46 percent.

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