Stocks Edge Up, Shaking Off Economic News

Stocks edged higher in another choppy, thin-volume session Wednesday after investors largely shrugged off news that ISM non-manufacturing index slipped last month and China's latest interest rate increase.

The Dow Jones Industrial Average rose into positive territory, after snapping a five-day rally in the previous session.

Among the blue-chip index, Bank of America and JPMorgan slipped, while DuPont gained.

The S&P 500 and the tech-heavy Nasdaq also turned higher. The CBOE Volatility Index, widely considered the best gauge of fear in the market, gained above 16.

Among key S&P stocks, energy and financials slipped, while consumer staples gained.

“There’s going to be continued volatility in the markets throughout the summer months into early fall,” said Zahid Siddique, portfolio manager of Gabelli Equity Trust. “[But] as the economic indicators begin to improve, there will be less volatility and more stability in the markets by year-end.”

Meanwhile, the ISM non-manufacturing index slipped slightly below estimates to 53.3 in June. Economists expected the index to fall to 54.0.

“The market really wanted some glimmer of hope that we’re exiting a soft patch…and this is not it,” Jim Iuorio, director of TJM Institutional Services told CNBC. “There’s too much to bear for the stock market to go higher.”

Meanwhile, the number of planned layoffs increasedfor the second month in a row, according a report from job outplacement firm Challenger, Gray & Christmas. This comes ahead of a number of key employment news starting with ADP's jobs survey and weekly jobless claims on Thursday and the government's monthly report on Friday.

The Chinese central bank approved an increase of 0.25 percentage points, the nation's latest move to cool growth.

The euro slid for a second session against the dollar.

Banks were among the worst performers, led by Barclays, which tumbled almost 5 percent after Moody's said almost a third of European banks being tested for their their resilience in bad markets may need extra support.

Other large banks such as BofA , Citigroup and Wells Fargo also traded to the downside.

On the tech front, Apple has placed orders for key parts in a next-generation iPhone which it is preparing to launch by year-end, according to people familiar with the situation. The new iPhone is rumored to use wireless chips from Qualcomm , instead of Samsung, used in the current iPhone4.

Netflix declined after Merriman Capital downgraded the online-video streaming firm to "neutral" from "buy." The company hit another all-time high following news that it will expand service in 43 countriesin South and Central America along with the Caribbean later this year.

Oil prices declinedamid worries over the sustainability of global economic recovery. U.S. light, sweet crude slipped below $97 a barrel, while London Brent crude traded near $113.

Meanwhile, Berkshire Hathaway has made a bid for Citigroup'sconsumer lending unit OneMain, according to the Wall Street Journal said, citing people familiar with the matter.

General Motors gained after Morgan Stanley added the automaker to its Best Ideas list, while removing Ford .

Walgreens gained after the drugstore chain reported better-than-expected June sales.

In other economic news, the Mortgage Bankers Assocation reported that application activity dipped 5.2 percent last weekeven though actual home loan requests rose. The overall drop came from a plunge in refinancing requests.

Stocks ended mostly flat in the previous session, as investors shrugged off a downgrade for Portugal’s sovereign debt.

The Moody’s downgrade of Portugal’s credit rating had already been priced in, analysts said, but five-year credit default swaps (CDS) on Portuguese government debt rose to a record high and yields on Portuguese bonds spiked on Wednesday.

President Obama will answer questions from Twitter usersaround the country in a town hall hosted by the social media service, focusing on jobs and the economy. He will also summon lawmakers to the White House on Wednesday to start new talks on raising the debt ceiling.

European shares snapped a seven-day winning streak, led by banks, as euro sovereign debt worries resurfaced after Moody's cut Portugal's credit rating.

On Tap This Week:

WEDNESDAY:Obama townhall on economy, NYSE shareholders vote on DB merger
THURSDAY: ADP employment report, jobless claims, oil inventories, chain-store sales
FRIDAY: Non-farm payroll, wholesale trade, consumer credit

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