Stocks were modestly higher in another thin trading session Wednesday after investors largely shrugged off a handful of weak economic news and looked ahead to Friday's employment report in addition to earnings season, which kicks off next week.
The Dow Jones Industrial Average climbed, led by DuPont and Caterpillar after snapping a five-day rally in the previous session. The Dow is up about 1,000 points for 2011.
The S&P 500 and the tech-heavy Nasdaq were mixed. The CBOE Volatility Index, widely considered the best gauge of fear in the market, gained above 16.
Among key S&P stocks, consumer staples and industrials advanced, while financials and telecom declined.
“There’s going to be continued volatility in the markets throughout the summer months into early fall,” said Zahid Siddique, portfolio manager of Gabelli Equity Trust. “[But] as the economic indicators begin to improve, there will be less volatility and more stability in the markets by year-end.”
Investors will be closely watching the government's monthly jobs report on Friday, which is expected to show a modest gain after a May slowdown.
In addition, second-quarter earnings season unofficially kicks off next week, with steel producer Alcoa scheduled to report after-the-bell Monday.
Financial stocks including BofA, Citigroup and Wells Fargo fell after shares in Portuguese and Spanish banks tumbled following Moody's downgrade of Portugal. The XLF ETF also traded lower.
In addition, Barclays tumbled almost 5 percent after Moody's said almost a third of European banks being tested for their their resilience in bad markets may need extra support. (Read More: A Warning Sign in the Financials?)
On the tech front, Apple has placed orders for key parts in a next-generation iPhone which it is preparing to launch by year-end, according to sources. The new iPhone is rumored to use wireless chips from Qualcomm , instead of Samsung, used in the current iPhone4.
Meanwhile, a man accused of hacking into AT&T servers and stealing personal information belonging to 120,000 iPad users was indicted.
Netflix edged lower after Merriman Capital downgraded the online-video streaming firm to "neutral" from "buy." The company hit another all-time high Tuesday following news that it will expand serviceto South and Central America along with the Caribbean later this year.
Oil prices declinedamid worries over the sustainability of global economic recovery. U.S. light, sweet crude slipped 24 cents to settle at $96.65 a barrel, while London Brent crude traded near $113. The euro slid for a second session against the dollar.
NewsCorp tumbled to lead the S&P 500 laggards amid a phone-hacking scandal by the media firm's newspapers in Britain.
Meanwhile, Berkshire Hathaway has made a bid for Citigroup'sconsumer lending unit OneMain, according to the Wall Street Journal said, citing people familiar with the matter.
General Motors gained after Morgan Stanley added the automaker to its Best Ideas list, while removing Ford .
Walgreens gained after the drugstore chain reported better-than-expected June sales.
Among the day's economic news, the ISM non-manufacturing index slipped slightly below estimates to 53.3 in June. Economists expected the index to fall to 54.0.
“The market really wanted some glimmer of hope that we’re exiting a soft patch…and this is not it,” Jim Iuorio, director of TJM Institutional Services told CNBC. “There’s too much to bear for the stock market to go higher.”
Also, the number of planned layoffs increasedfor the second month in a row, according a report from job outplacement firm Challenger, Gray & Christmas.
In addition, the Mortgage Bankers Association reported that application activity dipped last weekeven though actual home loan requests rose.
The Chinese central bank approved an increase of 0.25 percentage points, the nation's latest move to cool growth.
European shares snapped a seven-day winning streak, led by banks, as euro sovereign debt worries resurfaced after Moody's cut Portugal's credit rating.
On Tap This Week:
THURSDAY: ADP employment report, jobless claims, oil inventories, chain-store sales
FRIDAY: Non-farm payroll, wholesale trade, consumer credit
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