Stocks closed higher in volatile trading Thursday, lifted by energy and some better-than-expected economic reports from earlier in the session, but rumors that ratings agency Fitch may come out with a statement on a U.S. downgrade put a damper on gains.
"We're in a significant technical area that we'd like to see hold if we want to see a rally through the rest of the year," Joe Bell, senior equity strategist with Schaeffer's Investment Research.
Bell said 1,410 to 1,420 on the S&P 500 has been a "period of congestion" for most of August and was near the May 2012 peak—it was also the area where the index was prior to the Federal Reserve's QE announcement.
"We'll chop around at these levels to see if we can create a base here."
Among the key S&P sectors, telecoms and materials dragged, while health care and energy held small gains.
Stocks opened higher, but quickly lost steam as rumors about a Fitch ratings downgrade of the U.S. circulated. But a Fitch spokesperson referred CNBC to their statement from July, which stated that the agency "does not expect to resolve the negative outlook until late 2013."
"A rumor without a leg to stand on will find some other way to get around," said Art Cashin, director of floor operations at UBS Financial Services.
Investors will be looking ahead to Apple earnings after the closing bell. Analysts expect the iPhone maker to post earnings of $8.75 a share on revenue of $35.80 billion.
Meanwhile, Pandora shares plunged after being briefly halted following reports that Apple is planning to launch its own radio service in 2013.
The company's launch event comes amid a batch of other tablet releases ahead of the holiday season. Most recently, Apple took the wraps off its iPad Mini earlier this week. Meanwhile, Amazon.com and Barnes & Noble are expected to unveil larger versions of their tablets next month. Amazon is also expected to post earnings after the closing bell.
ConocoPhillips also rose even after the energy company posted a decline in profit, hurt by a price drop in crude oil and natural gas.
And Sprint Nextel posted a wider-than-expected loss as the telecom company spent heavily on a network upgrade.
Zynga surged after the social games services provider broke even on bookings of $256 million, both matching expectations. In addition, the firm announced a share repurchase program of $200 million. Needham upgraded the stock to "buy" from "hold."
Meanwhile, Facebook pulled back after surging nearly 20 percent in the previous session. S&P Capital IQ cut its rating on the social-networking giant to "hold" from "buy."
Best Buy slumped after the consumer-electronics retailer announced two of its executives will be leaving the company and added that it expects third-quarter earnings "significantly below" year-ago levels. At least three brokerages cut their price target on the stock.
On the economic front, weekly jobless claims fell to a seasonally adjusted 369,000, according to the Labor Department. Economists surveyed by Reuters expected a reading of 365,000. And durable orders jumped in September, according to the Commerce Department, topping expectations.
Meanwhile, pending home sales edged up a mere 0.3 percent in September from the previous month, according to the National Association of Realtors, disappointing analysts who had expected a gain of 2.1 percent.
European shares eked out a gain, hanks to a better-than-expected GDP report from the U.K.
Treasury prices held losses after the government auctioned $29 billion in 7-year notes at a high yield of 1.267 percent and the bid-to-cover ratio was 2.56.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
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