Stocks closed modestly higher, helped by a rally in tech shares, but investors were rattled as a sharp drop in crude-oil prices hit energy shares.
The 2% decline in crude on the New York Mercantile Exchange prompted selling of energy-related stocks and spoiled what was shaping up to be a strong day, particularly for the downtrodden tech sector.
The Dow Jones Industrial Average closed flat but briefly touched the 12,700 level while the S&P 500 rose slightly. The Nasdaq rose as a favorable quarterly report from Cisco Systems sparked investor interest in the tech sector.
Some traders downplayed the afternoon sell-off.
"I think when you look at where we came from and where we are at now, people seem to make a big deal of moves of 30 to 40 points," Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets, told CNBC.com. "There was a little bit of a rotation to tech. The Cisco numbers were enough to keep people pretty interested."
Kruszenski added that he does not expect any meaningful market corrections at this point.
"I don't see a catalyst for consolidation," he said. "The more the market moves up, the more people are going chase it, and those who weren't in stocks are going to jump back in."
The tech sector, boosted by a strong earnings report from Cisco Systems was the day's best performing group, followed by consumer discretionary stocks and financials.
Advancing stocks nearly doubled decliners on the New York Stock Exchange.
Before the bell, the Labor Department said preliminary fourth-quarter non-farm labor productivity rose 3%, more than expected. Unit labor costs, which are watched closely as a sign of inflation, rose 1.7%, slightly less than anticipated.
Despite today's better economic news, some analysts remain cautious for the near-term.
"We've been surprised at how strong the market has been," David Reilly, Director of Portfolio Strategy at Rydex Investments, told CNBC. "Clearly, the productivity numbers were very positive, as were the unit labor cost numbers. However, looking forward a bit, we think the market is flashing some warning signs--things like low mutual funds cash levels and high levels of margin debt."
Treasury prices closed modestly higher, sending yields slightly lower.
Retail stocks were among the day's winners as investors took money out of energy and bought consumer stocks. Shares of Sears and Target both closed higher.
In the materials sector, U.S. Steel hit another all-time high.
News Corp. reported fiscal second-quarter earnings of 26 cents per share, a penny ahead of Wall Street estimates. The media conglomerate said its quarterly sales were helped by "Borat" box office sales and "X-Men" DVDs, but profit fell from the year-earlier period.