Stocks gained despite further evidence of weakening in the nation's manufacturing sector and continuing concerns over the euro zone debt crisis.
The Dow Jones Industrial Average gained more than 30 points after slipping at the open, and after ending slightly lower on Tuesday amid further signs of economic weakness.
Among Dow components, DuPont gained, while Verizon fell.
TheS&P 500 and the Nasdaq gained slightly. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 18.
Among key S&P 500 stocks, materials and energy gained, while consumerstaples and telecom fell.
A 3.6 percent drop in durable goods ordersin April, released on Wednesday, was the largest drop in six months and the latest in a string of weaker-than-expected economic news, due largely to a fall in aircraft and motor vehicle orders. March durable goods orders were revised up to a 4.4 percent gain from a rise of 4.1 percent.
"Two things take the sting out of the report," said Jeff Kleintop, chief market strategist for LPL Financial. "The number did come in weaker than April, but we had a much stronger March than thought," Kleintop said. And, durable goods orders tend to be weak in the first month of a new quarter, he added.
Still, "this does confirm that there is a little bit of a soft spot related to the ripple effects from the Japanese tsunami and earthquake," Kleintop said.
The market is likely to continue to swing higher and lower from now through summer, he said. By fall the debt ceiling question will be resolved and the economy will have had 9 or 10 months of solid job growth, which should begin to turn the tide on housing, Kleintop said. For the year, he expects the market will post single-digit gains.
In stocks news, Martha Stewart Living soared on news from the media and merchandising company retained Blackstone Advisory Partners to explore strategic alternatives. The company also announced that Martha Steward is expected to rejoin the Martha Stewart Living board in the third quarter.
American International Group fell after the U.S. Treasury sold 200 million shares at $29 a share, slightly more than the Treasury needs to recoup its investment. The total $8.7 billion sale included 100 million shares sold by AIG.
Costco fell after saying a boost in gasoline salesin the last quarter hurt its profit margins, despite posting a boost in profits.
Shares of Hormel fell despite posting better-than-expected sales, and offering a strong earnings outlook.
Cisco traded slightly lower after news that language in its quarterly performance report filed with the Securities and Exchange Commission was slightly revised say revenue growth this quarter would be "relatively flat," instead of "flat to up 2 percent," the language the networking firm used in an earlier earnings conference call.
Oil prices rose slightlyon Wednesday despite an unexpected 616,000 barrel rise in crude stockpiles. Analysts had expected oil inventores to fall by 1.2 million barrels. U.S. light, sweet crude rose slightly to above $99 a barrel, while in London, Brentcrude rose nearly 1.5 percent to above $114.
On the initial public offering front, FreeScale Semiconductor Holdings was expected to raise about $1 billion in a 43.5 million share offering slated for Wednesday under the ticker "FSL." The share price was reportedly lowered to $18 to $20 a share from $22 to $24.
Also in U.S. economic news, the Mortgage Bankers Association'sseasonally adjusted index of mortgage application activity rose 1.1 percent last week, the fourth weekly rise. Refinancing applications gained 0.9 percent, while requests for home loans gained 1.5 percent.
In Europe, the Greek Prime Minister’s office denied the prospect of a snap election in the country in a CNBC interview. Greece has been forced to step up austerity efforts and the Greek people are increasingly angry about the spending cuts they face.
Investors are worried that other countries such as Ireland and Portugal may want to restructure their debt as well if Greece does.
French Finance Minister Christine Lagarde announced she is officially in the running for the top job at the IMF on Wednesday, although Brazil, China, India, Russia and South Africa have criticized European officials for suggesting the next head should automatically be a European.
Also in U.S. economic news, home prices fell 0.3 percent in March from February, and prices fell 5.8 percent in the 12 months through March, according to the Federal Housing Finance Agency.
European shares rosein a technical rally as concerns over Greece's debt restructuring lingered.
On Tap This Week:
WEDNESDAY: Five-year Treasury note auction; Minneapolis Fed President Narayana Kocherlakota speaks; USDA Food Prices Outlook, BlackRock shareholder meeting, ExxonMobil shareholder meeting, Yahoo investor day.
THURSDAY: GDP, USDA Agricultural Trade Outlook, jobless claims, corporate profits, natural gas inventories, seven-year Treasury note auction, money supply; earnings before-the-bell from Sony and Tiffany.
FRIDAY: Personal income and spending, consumer sentiment, and pending home sales.
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