Stocks slightly higher after early rally fizzles

NEW YORK - The stock market rose modestly Tuesday as renewed worries about a possible U.S.-led attack on Syria dampened an early rally.

Stocks surged in the opening minutes of trading, but the rally faded after the top Republican in Congress said he would support President Obama's call for the United States to take action. Speaking in the late morning, House Speaker John A. Boehner said the use of chemical weapons by Syria must be responded to.

The Dow Jones industrial average closed up 23.65 points, or 0.16 percent, to 14,833.96. The index had climbed as much as 123 points in early trading.

The Dow was also held back by Microsoft and Verizon, which both slumped after announcing deals.

The Standard & Poor's 500 index gained 6.80 points, or 0.42 percent, to 1,639.77. The Nasdaq composite climbed 22.74 points, or 0.63 percent, to 3,612.61.

The stock market got an early boost from a report showing that U.S. manufacturing expanded last month at the fastest pace since June 2011. The report was better than economist had expected, according to estimates compiled by the data provider FactSet.

The S&P 500 logged its worst performance since May 2012 last month as investors fretted about when the Federal Reserve will cut its economic stimulus. The Fed's next meeting, which starts Sept. 17, is when many on Wall Street think the central bank will begin winding down its massive bond-buying program.

Lawmakers in Washington may also throw investors a curveball.

To keep the government running, Congress needs to pass a short-term spending bill before the fiscal year starts Oct. 1. Then there's the government's $16.7 trillion borrowing limit. Treasury Secretary Jacob Lew warned that, unless the limit is raised soon, the government would lose the ability to pay all of its bills by the middle of October.

Political wrangling in Washington shook financial markets in August 2011, when lawmakers fought over raising the debt ceiling. That led the rating agency Standard & Poor's to strip the United States of its triple-A credit rating.

In government bond trading, the yield on the 10-year Treasury note climbed to 2.86 percent from 2.79 percent Friday. U.S. markets were closed Monday for Labor Day.

In commodities trading, the price of oil rose 89 cents, or 0.8 percent, to $108.54. The price of gold rose $15.90, or 1.1 percent, to $1,412 an ounce.