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Stocks climb on upbeat Fed views of US economy

Stocks closed higher for a second day on Wednesday, with the Dow logging its biggest gain in over a month, following the Fed's upbeat Beige Book report on the U.S. economy and as the White House pressed its case for military action in Syria.

The Dow Jones Industrial Average ended the session 96 points up, fueled by Intel and Coca-Cola, while Microsoft led the laggards.

The S&P 500 and the Nasdaq also finished higher, with the Nasdaq putting on just over 1 percent.

Earlier, the Nasdaq briefly suffered another problem with its main data feed that was at the center of the outage that brought trading in Nasdaq securities to a halt for about three hours nearly two weeks ago. A Securities and Exchange Commission spokesman said the agency is in contact with the Nasdaq and is monitoring developments related to the data feed problem.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, declined near 16.

Most key S&P sectors were in positive territory, led by techs and financials. Utilities held modest losses.

(Read more: Cramer: This sector in an 'amazing renaissance')

The U.S. economy expanded at a "modest to moderate" pace in most of the country between early July and late August, according to a Federal Reserve's Beige Book, its region-by-region assessment of the economy, suggesting that the economy is reaching the point where the central bank could pull back on its stimulus package of bond purchases.

San Francisco Fed President John Williams said the central bank should start to trim its bond-buying program later this year and end it mid-2014, as long as the job market continues to heal and inflation heads back up toward 2 percent.

Meanwhile, President Obama urged lawmakers to approve his plan for a military strike on Syria, adding the "international community's credibility is on the line." Obama's remarks in Stockholm, came a day before the G-20 summit in St. Petersburg, hosted by Vladimir Putin. Obama said he held out hope that the Russian president would back away from his support for Syrian President Assad.

U.S. Senate foreign relations panel passed authorization for use of military force in Syria. The vote by the panel clears the way for a vote on the resolution in the full Senate, likely next week. On Tuesday, Obama clinched the backing of key Congress members including House Speaker John Boehner for action on Syria -- an issue that has spooked the markets in recent days.

(Read more:Why oil prices may remain strong, war or no war)

On the economic front, the U.S. trade deficit increased 13.3 percent to $39.1 billion in July, according to the Commerce Department. Economists polled by Reuters had expected the trade deficit to rise to $38.7 billion.

Weekly mortgage applications climbed for the first time in four weeks as rates declined from their highest level this year, although demand for purchase loans dipped, according to the Mortgage Bankers Association.

The Labor Department is expected to release its widely-watched employment report on Friday, ahead of the Fed's September policy-setting meeting. Economists polled by Reuters expect non-farm payrolls to have increased by 180,000 jobs last month, up from a gain of 162,000 the month prior.

"The non-farm payrolls report for August released on Friday will likely prove far more crucial (than Wednesday's data), given the importance of labor market conditions and as such will likely generate a much greater reaction in financial markets," wrote Bank of Tokyo-Mitsubishi's Lee Hardman.

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