Stocks spiked in the final minutes of trading Wednesday following a report that the G20 is considering a $600 billion IMF lending program to euro zone, but came off their highs after the IMF denied the report.
Investors were also closely waiting for the key EU summit at the end of the week.
The Dow Jones Industrial Average gained 46.24 points, or 0.38 percent, to close at 12,196.37, led by JPMorgan and BofA .
The S&P 500 added 2.54 points, or 0.20 percent, to finish at 1,261.01, entering positive territory for 2011. Meanwhile, the Nasdaq edged down 0.35 points, or 0.01 percent, to end at 2,649.21.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished above 28.
Among key S&P sectors, financials rallied, while energy slipped.
The G20 is considering a $600 billion IMF lending program facility for Europe to combat the ongoing euro zone debt crisis, according to the Nikkei. However, the market came off their highs after the IMF denied the report.
"We’re looking for any type of news that’s coming out of Europe—it’s a headline-driven market as this proves it right here," said Todd Schoenberger, managing director at LandColt Trading. "And with the summit coming up, we’re still thinking we’re going to get some type of good news. If the G20 is going to come with $600 billion loan, it’s going to be wonderful for stocks."
Meanwhile, the S&P placed its triple-A credit rating on the EU and some of the largest rated European banks on creditwatch with negative implications. The news comes after the agency's recent warning to 15 of 17 euro zone countries that they could get downgraded.
Earlier, the agency added it could also cut credit ratings for several U.S. regional banks, including US Bancorp , PNC Financial Services, and BB&T in an ongoing move to apply new grading criteria announced last month.
“Europe is driving this market and if they are unable to contain the contagion, then that hampers our ability to diminish the unemployment rate and diminish our ability to grow,” said Kevin Brungardt, chairman of RoundPoint Financial Group.
Brungardt said he expect the economy to continue in a “slow crawling” pace and the housing market will start to see an influx by early 2013.
Energy stocks dragged on the market as oil dipped below $100 a barrelafter a bearish weekly oil inventory report. Peabody Energy and Halliburton were the biggest sector laggards.