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US stocks finish higher; S&P 500 near record close

U.S. stocks rose on Wednesday, with the Dow and S&P 500 bouncing back after a two-day decline, as Wall Street wagered the economy is rebounding from its worst quarterly performance in five years.

"GDP is obviously important, but by the time you get the final number, it's ancient history and the market has moved on," said Doug Foreman, chief investment officer at Kayne Anderson Rudnick, of data showing the economy contracted 2.9 percent in the first quarter.

Read MoreU.S. economy shrank more than expected in Q1

Bristol-Myers Squibb jumped after halting a late-stage trial of an experimental skin cancer drug after patients showed "superior overall survival." General Mills fell after the cereal maker reported a quarterly profit beneath Wall Street's expectations; Monsanto rose after the world's biggest seed producer raised its outlook for the year, and shares of CBS jumped after the Supreme Court ruled in favor of the network and three others, including NBC, CNBC's parent, saying TV startup Aereo had violated copyright law.

The market is "looking more at what the second quarter will hold. If you average the first quarter hit by weather and the second quarter rebound, that will be a truer indication of the run rate of economic activity," said Scott Clemons, chief investment strategist for private banking at Brown Brothers Harriman.

Equities had initially fluctuated amid data that had June expansion in the service sector countering worse-than-anticipated reports on the economy's performance and an unexpected drop in orders for durable goods in May.

"The GDP number was a little unsettling, but as unsettling as it is, corporate earnings did really well, and profit margins held in beautifully. In retrospect, it's actually pretty remarkable how well these companies did, but it helps explain why the bond market has been so strong," said Foreman.

"The second-quarter numbers have generally been pretty good, and are certainly indicative of growth," said Paul Nolte, senior vice president, portfolio manager at Kingsview Asset Management in Chicago.

Another report had durable goods declining 1.0 percent last month.

"The silver lining in the first-quarter GDP data was personal consumption continued to grow, which is important, because that's over 70 percent of GDP," said Clemons at Brown Brothers Harriman.

Also helping sentiment, a survey found the U.S. services sector in June expanded at its fastest clip in more than four years.

"In the midst of the poor first-quarter GDP report and mediocre durable goods figure, there was a bright spot in the data today," emailed Peter Boockvar, chief market analyst at the Lindsey Group.

"The survey is only five years old and thus doesn't have much history but today's number was the best since it began," Boockvar added of the report, which had equities turning higher after a modestly lower start.

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After an 18-point drop, the Dow Jones Industrial Average advanced as much as 65 points, and ended up 49.38 points, or 0.3 percent, at 16,867.51, with Nike pacing blue-chip gains that included 21 of 30 components.

The S&P 500 added 9.55 points, or 0.5 percent, to 1,959.53, less than four points from its June 20 record close of 1,962.87, with health care the best performing and consumer staples the sole declining sector among its 10 major industry groups.

The Nasdaq climbed 29.40 points, or 0.7 percent, to 4,379.76.

For every share falling, two rose on the New York Stock Exchange, where 653 million shares traded. Composite volume surpassed 3.1 billion.

The CBOE Volatility Index, a gauge of investor uncertainty, fell 4.8 percent to 11.55.

The 10-year Treasury yield used in figuring mortgage rates and other consumer loans fell 2 basis points to 2.57 percent.

The dollar declined against currency rivals, while dollar-priced commodities including oil and gold rose.

On the New York Mercantile Exchange, crude-oil futures added 47 cents, or 0.4 percent, to $106.50 a barrel; gold futures climbed $1.30, or 0.1 percent, to $1,322.60 an ounce..

On Tuesday, stocks dropped, with the S&P 500 retreating from a record for a second day, as geopolitical concerns outdid upbeat economic reports on housing and consumer confidence.

Read MoreDow hit hardest as Iraq concerns weigh

"We're been in this boring trading range in a while now, yesterday was one of the biggest moves we've had, and that wasn't even 1 percent. The market is treading water, or in a consolidation pattern, waiting for second-quarter earnings," said Foreman at Kayne Anderson Rudnick.

—By CNBC's Kate Gibson

Coming Up This Week:

Thursday

Earnings: Accenture, ConAgra Foods, Lennar, McCormick & Company,Winnebago Industries, Nike, Shaw Communications,Steelcase,Worthington Industries

8:30 a.m.: Weekly jobless claims

Friday

Earnings: Commercial Metals, KB Home

8:30 a.m.: Personal income

8:30 a.m.: Consumer spending

9:55 a.m. Consumer sentiment index

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