The Dow Jones industrial average ended up 32.18 at 5,648.39, having bounced back from an early loss of nearly 55 points.
Decliners outnumbered advancers 11 to 8 on the New York Stock Exchange, with 1,018 up, 1,400 down and 765 unchanged.
NYSE volume totaled 333.49 million shares, vs. 256.95 million in Friday's pre-holiday trading.
The NYSE's composite index rose 0.77 to 351.76, and the Standard & Poor's 500-stock index rose 2.74 to 654.73.
The Nasdaq composite index rose 0.86 to 1,142.36, and the American Stock Exchange index fell 1.89 to 557.79.
Broad-market indexes recovered from early slides too, with smaller and speculative issues lagging blue chips.
Bonds rallied back later in the morning after a widely watched survey of factory purchasing managers revealed no surprises in the growth of the manufacturing sector during August.
The yield on the 30-year Treasury bond - a key determinant of corporate and consumer borrowing costs - jumped as high as 7.14 percent this morning before dropping to 7.06 percent on the purchasing managers report.
Stocks and bonds had fallen earlier as inflation worries were aggravated by a report that the Federal Reserve is primed to hike interest rates aggressively, plus new signs of robust business activity and surging energy prices.