At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.01%, the S&P 500 index rose 0.67%, while the Nasdaq Composite index rose 0.62%.
The U.S. Congress passed a bill to reopen the government and raise the debt ceiling on Wednesday, just hours ahead of a deadline that would have opened the doors to possible sovereign debt defaults.
The deal will fund the government until Jan. 15 and raise the government borrowing limit until Feb. 7.
The deal failed to boost spirits in equities markets earlier, as soft earnings from IBM and Ford auto sales spooked investors.
Separately, Goldman Sachs beat earnings estimates though its revenue disappointed as did insurer UnitedHealth.
On a brighter note, telecom Verizon Communications beat expectations, while shares in BlackBerry gained on reports that Chinese PC and smartphone manufacturer Lenovo may offer to buy the company.
Later in the session, stocks staged an impressive comeback on expectations that the government shutdown and accompanying default fears took their toll on an already fragile economic recovery, which could prompt the Federal Reserve to delay plans to wind down its stimulus program until early 2014.
Prior to the shutdown, many were expecting the Fed to move in December.
The Fed is currently buying USD85 billion in Treasury holdings and mortgage debt a month to boost the economy, a monetary policy tool known as quantitative easing that drives down interest rates to spur recovery, boosting stocks in the process.
On Wednesday, the Federal Reserve released its Beige Book, which analyzes current economic conditions, and the document revealed that the U.S. central bank was concerned about the effects fiscal drags may have on recovery.
"Contacts across Districts generally remained cautiously optimistic in their outlook for future economic activity, although many also noted an increase in uncertainty due largely to the federal government shutdown and debt ceiling debate," the Beige Book read.
Lackluster economic indicators fueled talk of policy remaining loose as well, as Federal Reserve officials have repeated that they'll pay close attention to data when deciding on the fate of monetary stimulus measures.
The U.S. Department of Labor said Thursday the number of individuals filing for initial jobless benefits last week declined by 15,000 to a seasonally adjusted 358,000 from a downwardly revised 373,000 in the preceding week.
Analysts had expected U.S. jobless claims to decline to 335,000 last week.
Separately, data revealed that the Philly Fed manufacturing index ticked down to 19.8 from 22.3 in September, though the reading came in above expectations for a reading of 15.0.
Leading Dow Jones Industrial Average performers included American Express, up 5.15%, Verizon, up 3.803%, and United Technologies, up 1.68%.
The Dow Jones Industrial Average's worst performers included IBM, down 6.07%, UnitedHealth, down 4.69%, and Goldman Sachs, down 2.52%.
European indices, meanwhile, finished largely lower.
After the close of European trade, the EURO STOXX 50 fell 0.18%, France's CAC 40 fell 0.10%, while Germany's DAX 30 fell 0.38%. Meanwhile, in the U.K. the FTSE 100 finished up 0.07%.
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