Stocks ended up slightly as the major indices failed to close above significant benchmarks soon after Microsoft, in a surprise move, released earnings before the bell.
The Dow Jones Industrial Average rose 4.39 points or 0.04 percent, to close at 11,989.83, its highest close since June 19, 2008. On that date the Dow closed above 12,000,but the blue-chip index has to end above that psychologically important benchmark the last two sessions despite surpassing it in intraday trading.
General Electric and Home Depot led blue-chips higher, while Procter & Gamble and AT&T fell.
The S&P 500 rose 2.91 points, or 0.2 percent, to close at 1,299.54, its highest close since Aug. 28, 2008, which was also the last time the broad market index closed above 1,300.
The Nasdaq gained the most in percentage terms, rising 15.78 points, or 0.6 percent, to close at 2,755.28. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 17.
Among key S&P 500 sectors, financials, consumer discretionary, and industrials gained, while telecom and consumerstaples fell.
The market seemed to stall as it hit the major thresholds, but a sell-off doesn't appear to be in the offing, at least yet.
According to Yu-Dee Chang, chief principal at ACE Investment Strategists, over the past 90 years, the market in any given year has ended below the closing level of the year before at some point. In other words: "There's an 89% chance that we will give up what we gained this year," Chang says.
On average, the correction, when it happens is about 9 percent. Chang thinks it will be more in the neighborhood of 6 to 8 percent this time. By year end, however, Chang expects the market will deliver returns in the upper-single-digits to double-digits.
As a result, he said he is "very cautiously long" the market with the caveat he is "getting ready to take a lot off the table." And when the market does correct, he said he'll be ready to step back in.
Certain indicators confirm the notion that the market is due for a sell-off, such as record numbers of stocks hitting 52-week highs, said Michael Sheldon, chief market strategist at RDM Financial Group. Another indicator: smaller capitalization stocks have tended not to outperform large caps in recent weeks, Sheldon said.
But he adds, "generally speaking, the environment remains positive. Any pullback that we see will mostly be short term in nature."
Microsoft's earnings came out just before the market closed as the tech giant reported sales and profits that beat expectations. Microsoft's fiscal second-quarter profit was $6.63 billion, or 77 cents per share, on sales of $19.95 billion. That compares with profits of $6.66 billion, or 74 cents per share, on sales of $19.02 billion a year ago. Analysts surveyed by Thomson Reuters expected Microsoft to report profits of 68 cents a share on sales of $19.1 billion.
The dollar traded flat against a basket of currencies, while gold prices slumped 2 percent to close below $1,319 an ounce.
Materials stocks fell as well, led by Newmont Mining , Freeport-McMoran Copper & Gold , and Cliffs Natural Resources .
Earnings news continued to largely surprise to the upside, although there were some weak reports on Thursday.
AT&T and Procter & Gamble weighed the Dow down after AT&T reported profits that narrowly beat estimates and P&G reported earnings that beat expectations, but were hurt by rising commodity costs.
Modest gains by Caterpillar were not enough to offset losses by the other Dow components. Caterpillar, which serves as both an economic bellwether and a major weight on the Dow in terms of market capitalization, initially had stronger gains, but lost momentum during the session.
In other earnings news, Colgate-Palmolive sank after reporting earnings that fell short of expectations, due to higher promotion costs and lower sales.
But Stanley Black & Decker soared past its 52-week high after beating analyst expectations for its 2011 outlook, as the company showed evident strength after the merger of Stanley Works and Black & Decker last March.
And Potash gained after profits more than doubled on strong sales. The fertilizer company also announced it would double its quarterly cash dividend and declare a stock dividend. S&P Equity Research raised Potash's price target to $175 a share from $150.
Several tech companies released earnings after the market closed Wednesday, including Netflix , which surprised with a surge in quarterly profits and an upbeat outlook for the current quarter. Shares of the entertainment distribution company soared. At least half a dozen brokerages raised their price targets for Netflix, with Cannacord Genuity striking the highest target of $250 a share. Another four brokerages raised their ratings for the stock.
And QualComm's shares spiked higher after the chipmaker raised its outlook for the year on rising sales of the chips it makes for mobile phones. The company raised its revenue forecast for fiscal 2011 by $1.2 billion. At least four brokerages raised their price targets for QualComm.