Stocks finished near session highs across the board Wednesday, boosted by financials and materials, with the Dow and S&P 500 logging fresh closing highs.
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The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, closed below 13.
Materials and techs led the S&P sector gainers, while utilities lagged.
"It's healthy for the market to tread water for a while," said Dan Veru, CIO of Palisade Capital Management. "I could easily see the Dow being up another 5 to 7 or even another 10 percent from here by year end…There's an overall lack of participation in the stock market and there's also a healthy degree of skepticism and distrust in the rally, which are all positives."
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Chinese exports imports grew more than expected in April, allaying some concerns over a slowdown in the world's second-largest economy, but skepticism remained over the strength of real demand and the accuracy of the figures.
"We're in the skeptical camp. There have been a lot of doubts over these trade numbers from China over the past few months," said Jiong Shao, China strategist at Macquaire. "There is a valid case to be made that perhaps the trades—both exports and imports—have been used as a conduit for hot money flowing into China...Overall, we're in the cautious camp in terms of Chinese economic outlook."
Among earnings, AOL tumbled after the Internet company posted earnings that missed expectations, though revenue was above consensus. And Wendy's fell after the fast-food chain posted sales that missed expectations as same-store sales growth came in below estimates.
Walt Disney slipped even after the conglomerate posted quarterly results that edged past expectations, thanks to stronger performances by the parks and resorts unit, and the movie studio division. In addition, at least six brokerages raised their price target on the firm.
Electronic Arts surged to lead the S&P 500 gainers after the videogame maker handed in a strong 2014 outlook, though its current quarter may temporarily be tough. In addition, at least six brokerages boosted their price target on the company.
And JCPenney said it expects to see a 16.6 percent drop in same-store sales in the first-quarter compared to a year ago and revenues below expectations. However, the retailer did report cash levels that were higher than analysts had thought, and the Street expects sales to improve later this year as Penney tries to turn its fortunes around after bringing back ex-CEO Myron Ullman, sending shares higher.
Approximately 85 percent of S&P 500 companies have posted quarterly results so far, with 67 percent topping earnings expectations and 24 percent missing forecasts, according to Reuters. If all remaining companies post numbers in line with estimates, earnings will be up 5.3 percent on last year.
But on average, sales have come in 1 percent below estimates, with only 47 percent of companies beating their revenue projections.
Weekly mortgage applications gained last week, thanks to better refinancing demand and as interest rates declined to the lowest level of the year, according to the Mortgage Bankers Association.
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In the bond markets, the government auctioned $24 billion in 10-year notes at a high yield of 1.810 percent. The bid-to-cover ratio, an indicator of demand, was 2.70, which compares to the recent average of 2.92.
—By CNBC's JeeYeon Park. Follow JeeYeon on Twitter: @JeeYeonParkCNBC
On Tap This Week:
THURSDAY: BoE announcement, Fed's Lacker speaks, jobless claims, wholesale inventories, natural gas inventories, 30-yr bond auction, Fed's Plosser speaks, Fed balance sheet/money supply, Barclays's investor mtg, Ford annual mtg, weekly rail numbers, chain store sales; Earnings from Dean Foods, Dish Network, Sony, Nvidia, Priceline.com
FRIDAY: Fed's Evans speaks, Bernanke speaks, Fed's George speaks, Treasury budget, G-8 mtg; Earnings from ArcelorMittal, GoldFields
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