Stocks spiked in the final minutes of trading Wednesday following a report that the G20 is considering a $600 billion IMF lending program to euro zone, but came off their highs after the IMF denied the report.
Investors were also closely waiting for the key EU summit at the end of the week.
The Dow Jones Industrial Average gained 46.24 points, or 0.38 percent, to close at 12,196.37, led by JPMorgan and BofA .
The S&P 500 added 2.54 points, or 0.20 percent, to finish at 1,261.01, entering positive territory for 2011. Meanwhile, the Nasdaq edged down 0.35 points, or 0.01 percent, to end at 2,649.21.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished above 28.
Among key S&P sectors, financials rallied, while energy slipped.
The G20 is considering a $600 billion IMF lending program facility for Europe to combat the ongoing euro zone debt crisis, according to the Nikkei. However, the market came off their highs after the IMF denied the report.
"We’re looking for any type of news that’s coming out of Europe—it’s a headline-driven market as this proves it right here," said Todd Schoenberger, managing director at LandColt Trading. "And with the summit coming up, we’re still thinking we’re going to get some type of good news. If the G20 is going to come with $600 billion loan, it’s going to be wonderful for stocks."
Meanwhile, the S&P placed its triple-A credit rating on the EU and some of the largest rated European banks on creditwatch with negative implications. The news comes after the agency's recent warning to 15 of 17 euro zone countries that they could get downgraded.
Earlier, the agency added it could also cut credit ratings for several U.S. regional banks, including US Bancorp , PNC Financial Services, and BB&T in an ongoing move to apply new grading criteria announced last month.
“Europe is driving this market and if they are unable to contain the contagion, then that hampers our ability to diminish the unemployment rate and diminish our ability to grow,” said Kevin Brungardt, chairman of RoundPoint Financial Group.
Brungardt said he expect the economy to continue in a “slow crawling” pace and the housing market will start to see an influx by early 2013.
Energy stocks dragged on the market as oil dipped below $100 a barrelafter a bearish weekly oil inventory report. Peabody Energy and Halliburton were the biggest sector laggards.
Among banks, Citigroup declined after the banking giant announced that it would cut almost 4,500 jobs worldwide, almost 2 percent of its workforce.
MidAmerican Energy, part of Warren Buffett's Berkshire Hathaway , is to buy First Solar's 550-megawatt Topaz Solar Farm power plant in California, a source familiar with the transaction said.
Apple will be in the spotlight after HTC said it has no plans to change fourth-quarter sales guidance, as shares in the world's No.4 smartphone maker fell over 5 percent on concern its sales decline may not moderate from a 30 percent drop in November.
General Motors is closing in on a package of proposed fixes for the Chevrolet Volt battery pack that engineers believe would eliminate the risk of a fire being triggered days after a crash, two people with knowledge of the situation said.
India suspended plans to open its $450 billion supermarket sector to foreign groups such as Wal-Mart , backtracking on one of the government's boldest reforms in years in the face of a huge political backlash.
Martha Stewart Living Omnimedia surged after news JC Penney may be buying a 16.6 percent stake in the diversified media and merchandising company for $38.5 million, according to the New York Times.
Talbots skyrocketed after the women's clothing retailer said the private-equity firm run by retail veteran Stefan Kaluzny offered a $212.1 million buyout. Meanwhile, Nomura raised its price target on the firm to $3 from $2 and Wedbush boosted its rating on the firm to "neutral" from "underperform."
And Men's Wearhouse jumped after the apparel retailer posted earnings that topped estimates.
On the economic front, weekly mortgage applications jumped last weekas interest rates continued to decline, according to the Mortgage Bankers Association.
Consumer credit increased by $7.65 billion to $2.457 trillion in October, according to the Federal Reserve.
Meanwhile, China's annual rate of export growth slowed in November versus October, vice commerce minister Chong Quan told reporters after an official media briefing.
—Follow JeeYeon Park on Twitter: twitter.com/JeeYeonParkCNBC—
On Tap This Week:
THURSDAY: BoE announcement, ECB announcement, McDonald's sales report, jobless claims, wholesale trade, AT&T CEO speaks; Earnings from Costco, Smithfield Foods
FRIDAY: International trade, consumer sentiment, Greek short selling ban expires, EU summit
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