A surprise jump in consumer confidence gave stocks a modest lift, but gains were kept in check as investors remain cautious about the strength of the economy.

A report Tuesday showed confidence climbed more than expected in August. That gave traders a reprieve from a string of reports throughout the month that indicated economic growth continues to slow. A report earlier in the day indicated manufacturing activity slowed in the Midwest in August.

"Market pessimism in the very near-term has hit a nadir," said John Brady, a senior vice president at MF Global. The small rise in confidence took the edge off the downbeat mood, Brady said. However, he cautioned any gains might be short lived because traders are hesitant to make big moves before Friday's key monthly employment report. The unemployment rate likely inched higher in August as employers avoid major hiring.

The Dow Jones industrial average rose about 54 points in midday trading after being down as much as 68 earlier in the day. Broader indexes also rose, reversing earlier declines.

Retailers like Macy's Inc. and Best Buy Co. were among the biggest beneficiaries of the better-than-expected consumer confidence report. Growing confidence could eventually lead to a jump in retail sales.

Reports throughout August have indicated economic growth is slowing and consumer confidence doesn't necessarily mean spending will rise significantly. Some investors worry the slowdown could continue throughout the second half of the year and lead the country back into recession. Stocks have been pummeled throughout the month because of uncertainty about the pace of the rebound.

Tuesday's regional manufacturing report was the latest to follow that trend. The drop in the Chicago Purchasing Managers Index was similar to declines seen in other regional manufacturing reports earlier this month.

The Conference Board said its consumer confidence index rose to 53.5, from a revised 51 in July. Economists polled by Thomson Reuters expected a slight increase. While the jump in confidence did provide some relief for the market Tuesday, it still is far from indicating a strong economy. A reading above 90 indicates a healthy economy.

In midday trading, the Dow rose 53.92, or 0.5 percent, to 10,063.80. The Standard & Poor's 500 index rose 5.16, or 0.5 percent, to 1,054.08, while the Nasdaq composite index climbed 4.85, or 0.2 percent, to 2,124.82.

About two stocks rose for every one that fell on the New York Stock Exchange, where volume was 352.8 million shares.

The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.50 percent from 2.53 percent late Monday. It fell as low as 2.48 percent earlier in the day. The 10-year note yield is often used as a gauge to set interest rates on mortgages and other consumer loans.

Chicago PMI fell to 56.7 in August from 62.3 last month. The drop was slightly worse than economists forecast. The manufacturing sector has shown weakness during the third quarter after being among the strongest sectors early in the year.

A better-than-expected report on home prices was largely written off as getting a lift from a now expired home buyer tax credit. The S&P/Case-Shiller Home Price Index grew 1 percent between May and June, the third straight monthly gain. Those gains are likely to slow because of the expiration of the government's tax credit. July sales figures indicated a steep drop now that the surge in buying because of the tax credit has worked its way out of the data.

Best Buy rose 43 cents to $31.89. Macy's climbed 49 cents, or 2.6 percent, to $19.68.

Overseas, Japanese stocks were hammered as the yen hovers near a 15-year high against the dollar. Many Japanese companies like Sony, Panasonic and Toyota rely heavily on exports, so a stronger yen cuts into their profits. Japan's Nikkei stock average tumbled to a 16-month low, falling 3.6 percent.