And further adding to geopolitical worries, two large 7.0-magnitude earthquakes struck near north Thailand's borderwith Myanmar and Laos, according to the U.S. Geological Survey. There was no immediate word on any casualties or damage.
Financial stocks were among the laggards. Morgan Stanley traded flat to lower after Meredith Whitney Advisory Group cut its first quarter earnings estimate on the investment bank to 35 cents a share from 59 cents.
Bank of America fell for a second day after news the Fed didn't give the banking giant approval to raise its dividend, but Capital One traded slightly higher even after the Wall Street Journal reported the bank also didn't receive approval to raise its dividend. Also, S&P Equity Research cut the bank to "sell" from "hold."
In M&A news, Walgreen was up slightly after announcing it would buy online retailer drugstore.com , for about $29 million in cash. Drugstore.com skyrocketed more than 100 percent on the news.
On the earnings front, Best Buy shares declined even after the electronics retailer posted strong quarterly profitsthanks to a boost in its mobile business.
ConAgra gained despite reporting a lower quarterly profit due to rising commodity prices.
Red Hat led the tech sector higher, gaining more than 15 percent after reporting a 43 percent jump in quarterly results. In addition, Baird raised its rating on the firm to "outperform" from "neutral." Micron also jumped despite reporting an 80 percent drop in profits and deteriorating margins. In addition, at least three brokerages raised their price targets on Micron.
Oracle and Research In Motion were slated to report earnings after-the-bell Thursday.
Caterpillar rose after the company said it would invest $5 billion in expansion of its production capacity during its analyst meeting on Wednesday. In addition, Jefferies raised its price target on the firm to $125 from $120.
In Europe, Portugal’s Prime Minister Jose Socrates resigned on Wednesday after parliament rejected his government's latest austerity measures, designed to help Portugal avoid having to seek an international bailout. Many analysts believe a bailout is now inevitable.
Despite the negative news, stocks continued to move higher much of the week, although trading has been light. Only 545 million shares changed hands on the New York Stock Exchange floor in mid-afternoon trading.
One reason is while the news out of Portugal is worrisome, the possibility of the eurozone country needing a bailout has been discussed for several months.
"Although it looks horrible, there's not an investment professional who invests in the eurozone who hasn’t priced that into their thinking," said Phil Orlando, chief market strategist at Federated Investors.
The same is true of the events in Japan and the Middle East, which is why investors are more focused on the U.S. economy and its implications for the U.S. stock market, Orlando said. While the economic numbers this morning were mixed, more signs in the manufacturing and consumer sector are pointing to the economy's growing strength, he said.
Job growth, too, may soon turn the corner. The number of individuals filing initial claims for unemploymenthas been less than 400,000 in five of the past seven weeks, Orlando noted.
"That’s the level when economy is producing a robust number of jobs," he said, adding that the government's nonfarm payrolls figures will soon reflect that strength. "We will see a series of 200,000 to 300,000 positive nonfarm jobs gains a month until the middle of this year," he said.
Also in Europe, European leaders were meeting in Brussels Thursday, but were not expected to endorse a full package of measures to attack the sovereign debt crisis, despite the fact that they had been expected to do so for months.
"The key at the end of the day is whether Spain comes through this,” Larry Kantor, global head of research at Barclays Capital told CNBC. Kantor expected a resolution to the crisis, but not at this week’s summit.
European shares rose to a two-week closing high, boosted by strong results from retailers.
Moody's Investors Service downgraded debt ratings on 30 Spanish banks, mostly smaller and regional institutions. Moody's said the outlook for the banks remains weak.
On the U.S. economic front,durable goods in February fell 0.9 percent in February compared with a 3.6 percent rise in January, the Commerce Department said Thursday. Ex-transportation, durable goods fell 0.6 percent in February compared with a 3.0 percent drop in January.
Jobless claims, meanwhile, fell by 5,000 last week to 382,000, according to the Labor Department. The four-week moving average dropped to 385,250, the lowest level in more than two-and-a-half years, and the fourth week below 400,000. Economists surveyed by Reuters said claims would fall to 383,000 from 385,000, the level previously reported.
On Tap This Week:
THURSDAY: Money supply; after-the-bell earnings from Oracle, Research In Motion.
FRIDAY: USDA food prices outlook; GDP revision, corporate profits, consumer sentiment.
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