Stocks ended modestly higher across the board Thursday, lifted by financials, after House Speaker John Boehner said he would continue to work on a solution to the avert the "fiscal cliff."
"Given how both sides seem to be behaving, the prospects fora deal look promising," said Rex Macey, CIO at Wilmington Trust Investment Advisors. "But anything surrounding the cliff could move this market—all eyes are on it in the short term."
Major U.S. Indexes
The Dow Jones Industrial Average gained 59.75 points, or 0.45 percent, to end at 13,311.72, led by Bank of America and JPMorgan.
The added 7.88 points, or 0.55 percent, to close at 1,443.69. The Nasdaq climbed 6.03 points, or 0.20 percent, to finish at 3,050.39. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 17.
All key S&P sectors turned positive, led by banks and telecoms.
"I continue to believe that if a compromise is reached and it is half-baked and kicks the can down the road for the more difficult issues, the market celebration will be short-lived," wrote Elliot Spar, market strategist at Stifel Nicolaus.
Republicans expect the House to pass Speaker John Boehner's "Plan B" later Thursday as hopes faded for a broad agreement on averting the "fiscal cliff" before Christmas.
Boehner pressed his "Plan B" proposal that would extend the Bush-era tax cuts for those earnings up to $1 million, despite Obama's veto threat, saying it will be approved Thursday by the GOP-controlled House. (Read More: Fiscal Cliff Complete Coverage)
Meanwhile, Obama said the two sides were only $200 billion apart in a deal to avoid the looming "fiscal cliff," and he's ready to get the job done.
Stocks hovered around the flatline earlier in the session as investors largely overlooked a pair of better-than-expected economic reports. The economy grew at a faster-than-expected pace in the third quarter, expanding at a 3.1 percent annual rate, according to the Commerce Department, up from the 2.7 percent pace reported last month. And existing home sales jumped 5.9 percent to a seasonally adjusted annual rate of 5.04 million units in November, according to the National Association of Realtors.
Herbalife fell a second session after widely-followed hedge fund manager Bill Ackman outlined his case for shorting the nutrition and skin-care products company. Ackman criticized Herbalife, saying the company is a "pyramid scheme" that has grown rapidly without demonstrating "much substance" to justify the growth. The company has shed more than 20 percent in the last two days. (Read More: )
Merck slumped after the pharmaceutical company said its cholesterol drug study failed. The company said it no longer plans to seek approval for the drug in the U.S.
NYSE Euronext skyrocketed to lead the S&P 500 gainers after IntercontinentalExchange agreed to acquire the financial services company in a deal worth nearly $8.2 billion. The offer values NYSE shares at $33.12, a 38 percent premium over Wednesday's closing price. The acquisition is expected to close in the second half of 2013.
Among earnings, Rite Aid surged after the drugstore chain posted its first quarterly profit in more than five years and boosted its forecast for the year.
ConAgra Foods edged higher after the packaged foods company posted better-than-expected earnings, and said its full-year profit will be at the high end of estimates.
Among earnings, Nike and Research In Motion are among notable companies slated to report after the closing bell.
Also on the economic front, weekly jobless claims climbed 17,000 to a seasonally adjusted 361,000 in the previous week, according to the Labor Department. The four-week moving average for new claims, fell 13,750 to 367,750, the lowest since late October. And leading indicators slipped 0.2 percent to 95.8 in November, according to the Conference Board.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
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FRIDAY: Quadruple witching, durable goods orders, personal income & outlays, Chicago Fed activity index, consumer sentiment, BLS state employment stats; Earnings from Walgreen
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