Stocks closed modestly higher, but the Dow lost ground in the final minutes of trading to close below 12,000 after bouncing above and below that level much of the session.
The Dow Jones Industrial Average rose 8.25 points, or 0.07 percent, to close at 11,985.44, ending below the psychologically important 12,000 level after rising as high as 12,020.52 during the session. It was still the highest close for the Dow since June 19, 2008, which was the last day the Dow closed above the benchmark.
DuPont , Alcoa and Verizon led the blue-chip index higher, while Boeing and Disney declined.
The S&P 500 rose 5.45 points, or 0.42 percent, to close at 1,296.63, its highest close since Aug. 28, 2008. The Nasdaq gained 20.25 points, or 0.74 percent, to close at 2,739.50. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 17.
Among key S&P sectors, energy, materials and telecom advanced, while utilities and consumer staples fell.
Despite the fanfare around Dow 12,000, some market pros advised cautionin using the threshold as a reason to jump into stocks. And some strategists stressed that the 1,300 level on the S&P is the next important mark that investors should watch. The last time the S&P 500 closed above 1,300 was Aug. 28, 2008.
"Most won't invest just because the Dow is approaching the 12,000 mark," said Beth Larson, principal at Evermay Wealth Management. "I would hope that not too many individual investors are getting in at this level."
Hitting 12,000 would mark a 23.88 percent jump in the Dow from its lows in July. But the S&P and the Nasdaq have already hit that threshold, the S&P on Jan. 3, and the Nasdaq on Dec. 3.
"My concern is that at some point, I don’t think the fundamentals behind our market movement is supporting the market movement that we’ve gotten ," said Jonathan Corpina, managing director at Meridian Equity Partners. "As we move higher, it’s great, but the higher we go, the more fragile the market can become."
The support for stocks on Wednesday reflected largely positive earnings results, which Corpina described as "more doubles and triples," than the "triples and home runs" of the previous earnings season.
"In the past, the bar wasn’t set that high," Corpina said. "Now, analysts are expecting a lot out of these companies."
The market's move higher also reflected the President's comments in his State of the Union address Tuesday, which Corpina said were realistic, in that the President didn't offer a campaign speech, but a focus on areas of strength as well as areas that need improvement.
The Federal Reserve said today that the U.S. economy is improving, but not at a brisk enough rate to require a change to its plan to buy $600 billion in long-term securities to bolster the economy before the middle of the year. The Fed also announced it was leaving short-term rates unchanged.
The news was largely as expected, although the Fed did acknowledge a slight upgrade to household spending and business spending on equipment and software, and also, the central bank acknowledged some inflationary pressures, particularly with commodities.
"It appears the Fed does not feel the inflation threat is a dire risk to force the committee to curb, or even prematurely end, its quantitative easing policy," said Todd Schoenberger, managing director, equity trading, LandColt Trading. "Knowing $7 billion a day in liquidity injections is expected to continue deep into the spring, the bull run in equities may very well continue for months to come."
Stocks largely held their gains after the Fed announcement, but bonds sold off after a short lift immediately after, said Anthony Valeri, investment strategist for fixed income at LPL Financial.
The weakness in the bond market reflects investor concerns with the Fed's decision to continue with its second round of bond buying (a policy known as "quantitative easing 2 - or QE2) at the same time President Obama failed to outline tangible steps to deal with the deficit in his State of the Union address, Valeri said.
"With QE2 in place, capping discretionary spending won’t put any dent in the deficit, and the bond market is seeing right through that," he said.