Stocks End Mixed; Nasdaq Logs 5-Day Rally

Stocks ended near session highs Wednesday, but still closed narrowly mixed, as worries over the euro zone and declines in the energy sector limited gains.

The Dow Jones Industrial Average slipped 13.02 points, or 0.10 percent, to close at 12,449.45, led by Disney and Coca-Cola .

BofA and Alcoa led the blue-chip gainers.

The S&P 500 eked out a gain of 0.40 points, or 0.03 percent, to end at 1,292.48. The Nasdaq added 8.26 points, or 0.31 percent, to finish at 2,710.76, logging a five-day winning streak.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, closed near 21.

Among key S&P sectors, energy slipped, while banks and materials rallied.

“If you look at where we were last year, we had the European problems, China slowing down and the U.S. economy faltering…Now, Europe and China are still problems, but the U.S. economy is firming,” said Rick Fier, vice president of equity trading at Conifer Securities. “While we’re not out of the woods at all, the one good thing is that [the strengthening U.S. economy] should put a floor in the market.”

The euro dipped below $1.27 against the U.S. greenback, falling to a 16-month low, after ratings agency Fitch urged the ECB to ramp up buying of euro zone debt to prevent a "cataclysmic" collapse of the euro. European shares also ended lower.

Meanwhile, France has not been informed of any imminent decision on its credit rating downgrade, according to sources from the French Treasury.

Investors will be watching two key bond auctions in Spain and Italy on Thursday.

Earlier, Germany reported figures that showed its economy shrank in the last quarter of 2011, dampening hopes of an improvement in the economy.

Deutsche Boerse and NYSE Euronext are in focus after reports that European antitrust regulators made it clear they would recommend the deal be blocked. The news places the deal to create the world's largest exchange operator on the brink of collapse.

Meanwhile, the U.S. economy expanded at a moderate pacein late November and December as consumer spending picked up, according to the Federal Reserve's latest Beige Book report, a summary of economic conditions in the 12 Fed districts.

Dell said it plans to launch its first consumer tablet computer in late 2012. The company already has an enterprise-focused, "Streak" tablet, but now plans a bigger push into the consumer arena.

Coca-Cola and Pepsi both declined after UBS cut its ratings on both beverage giants to "neutral" from "buy." UBS also reduced its price target on Coke to $70 from $73.

Oil fell to settle below $101 a barrelamid worries about the euro zone and after the EIA said crude oil inventories soared last week. Energy companies were under pressure, including oil giants Chevron and ExxonMobil .

Urban Outfitters plunged to lead the S&P 500 decliners after Citi cut its price target on the clothing retailer to $20 from $34. This comes after a day the company named a new CEO.

Among earnings, Supervalu tumbled after the grocery chain posted a wider-than-expected quarterly loss. The company also slashed its sales view.

Lennar posted a lower quarterly profit. But shares of the homebuilder gained to hit a new 52-week high after firm still reported a sharp gain in new orders. Rivals Toll Brothers and DR Horton also rose to touch fresh 52-week highs.

On the economic front, weekly mortgage applications gained in the first week of 2012as demand for both purchases and refinancing gained, according to the Mortgage Bankers Association.

Treasury prices extended their gainsafter government auctioned $21 billion in 10-year notes at high yield of 1.900 percent and bid-to-cover of 3.29. The government is scheduled to auction $13 billion in 30-year bonds on Thursday.

Republican presidential candidate Mitt Romney faces a critical test in South Carolina, a day after after a solid victory in New Hampshire.

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On Tap This Week:

THURSDAY: BoE announcement, ECB announcement, jobless claims, retail sales, business inventories, 30-yr bond auction
FRIDAY: International trade, import & export prices, consumer sentiment, Richmond Fed Pres speaks; Earnings from JPMorgan

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