Stocks Advance After Greek Vote; Banks Gain

Stocks extended their gains in thin, choppy trading Wednesday, led by financials, after the Greek parliament passed the austerity package and following a positive pending home sales report.

The Dow Jones Industrial Average turned higher after briefly dipping into negative territory, following a two-day triple-digit rally in the previous sessions.

The S&P 500 and the tech-heavy Nasdaq climbed. The CBOE Volatility Index, widely considered the best gauge of fear in the market, slipped below 19.

Among key S&P sectors, financials, energy and materials led the gainers.

Greek Prime Minister George Papandreou won a parliamentary majority in favor of a five-year austerity plan, clearing a major hurdle in Greece's bid to win access to international funding to avoid default.

Greece's parliament approved a five-year austerity plan on Wednesday with 155 votes in favor and 138 votes against. It must now win approval on Thursday for legislation detailing specific implementation measures for the 28 billion austerity package.

Anticipation of parliament's approval has sparked a two-session rally, helping to erase losses partly brought on by the crisis. But gains have come on light volume, suggesting that caution remained and further upside could be limited.

“There were no real surprises, which was a good thing,” said Rick Fier, vice president of equity trading at Conifer Securities. "[With window dressing and quarter end,] we’ll chop around until the end of the week—volume is still light."

Fier said investors are turning their focus to second-quarter earnings and are jumping into sectors that have the best potential to outperform, such as techs.

However, investors are "still avoiding the banks," Fier noted.

Financials, down almost 5 percent this year, were the leading sector today. Bank of America jumped after the bank reached a final settlement in which it will pay $8.5 billion in cash to a group of private trustswho say the bank violated its obligations regarding mortgages issued from Countrywide Financial.

Rivals Citigroup , JPMorgan , Morgan Stanley and Goldman Sachs also advanced even after the banks' price targets were cut by KBW.

Oil prices climbedafter a weekly government report showed inventories fell. U.S. light, sweet crude gained near $96 a barrel, while London Brent crude rose above $110.

Among techs, Microsoft slipped to lead the Dow laggards, a day after the software giant unveiled plans to create an online version of its popular Office program.

Meanwhile, Apple edged higher amid speculation that the tech giant is expected to cut its iPhone 3GS to $0 (on contract, $399 unsubsidized) in conjunction with its iPhone 5 launch, expected in September. According to an RBC note, the approach is intended to "target mid-market smartphone buyers" and counter Android's mid-market expansion.

BJ's Wholesale climbed after the retailer agreed to be acquired by private equity firm Leonard Green & Partnersand funds advised by CVC Capital Partners in a deal that values the company at about $2.8 billion.

On the earnings front, KB Home tumbled after the homebuilder reported a bigger-than-expected quarterly loss.

Monsanto gained after the agribusiness company said its net income skyrocketed nearly 80 percent, thanks to robust sales in its core seeds and genetic traits business.

Family Dollar Stores turned higher even after the retailer posted a lower-than-expected profit. And General Mills also gained even after the food manufacturer forecast weaker earnings ahead amid higher costs for ingredients and fuel.

In economic news, pending home sales rose more than expected in May, according to the National Association of Realtors. The NAR's Home Sales Index increased 8.2 percent to 88.8, rebounding from April's seven-month low. Economists had expected home resale contracts to rise only 3.8 percent after a previously reported 11.6 percent drop.

Weekly mortgage applications slipped last weekamid weakening demand, even as mortgage rates dropped, according to the Mortgage Bankers Association.

And the talks to raise the U.S. debt ceiling have reached a critical moment, with President Barack Obama leading negotiations with Republican lawmakers.

European shares hit their highest close in two-weeksfollowing the Greek vote.

On Tap This Week:

WEDNESDAY: 7-yr note auction, farm prices, Fed meeting on card fees
THURSDAY: Weekly jobless claims, Fed's Bullard speaks, Chicago PMI, End of QE2, Marathon Oil split takes place
FRIDAY: Consumer sentiment, ISM mfg index, construction spending, Biden's deadline for deficit plan, HP launches TouchPad, auto sales

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