The Dow Jones industrial average rose 34 points, or 0.3 percent, to 12,792 in the first half-hour of trading. The S&P 500 rose 4, or 0.3 percent, to 1,347. The Nasdaq composite index rose 16, or 0.5 percent, to 2,926.
U.S. workers were more efficient late last year, the government reported, though productivity grew more slowly than in the summer. Productivity measures output per hour worked. As productivity grows more slowly, employers might hire more workers to keep up with demand.
A closely-watched private estimate of hiring also exceeded economists' expectations. Payroll processor ADP said employers added 216,000 jobs last month. The result lifted hopes about the big February jobs report, due to be released Friday.
The Dow dove 203 points on Tuesday, the first real hiccup in this year's strong rally. Many market-watchers believe that stocks had risen too quickly, and were due for a setback. Before Tuesday, the Dow had been up more than 6 percent for the year. The Standard & Poor's 500 had been up 8.5 percent.
The sell-off was brought on by fears about the latest deadline in Greece's debt crisis. Hedge funds and banks that own Greek government debt have until later this week to exchange their bonds for new bonds that are less valuable. If too few are willing, Greece might default, which could rattle the global financial system.
Investors who fear that Tuesday's decline signals the end of the four-month rally might be glad to know that the rally has survived six other 200-point drops in the Dow.
On Nov. 21, the Dow fell 248 points after a congressional committee failed to reach a deal to reduce federal spending. Two days later, it fell 236 points because of worries about the European debt crisis.
Despite those falls, the Dow is still up almost 20 percent since Oct. 3, 2011 and 4.7 percent this year. The S&P 500 index, a broader measure of the market, is up 7.2 percent for the year. Just last week, the Dow closed above 13,000 for the first time since May 2008.
Even before Tuesday, there was a sense among many market watchers that stock buyers may have gotten ahead of themselves. Skeptics argued that stock prices reflected a recovering U.S. economy but downplayed the risk of a European recession and a default in Greece.
Among stocks making big moves:
— Internet radio company Pandora Media Inc. dove 26 percent after its projected results for the first quarter badly missed analysts' estimates.
— Netflix rose 2.5 percent after CEO Reed Hastings recently suggested that the video streaming and DVD-by-mail company form partnerships with cable TV companies to expand its customer base. The company has about 22 million online streaming subscribers in the U.S.
— American Eagle Outfitters rose 5.4 percent. The teen clothing retailer said it expects profit margins and sales to improve this year. Revenue at stores open at least a year rose 10 percent in the fourth quarter.