Stocks Close Higher, Led by Energy; FB Slips

Stocks finished higher in relatively thin trading Wednesday, led by the energy sector and following a pair of better-than-expected economic reports, but investors remained cautious ahead of the two-day EU summit later this week.

S&P 500

The Dow Jones Industrial Average extended its gains for a second day, jumping 92.34 points, or 0.74 percent, to finish at 12,627.01, led by JPMorgan and BofA .

The S&P 500 advanced 11.86 points, or 0.90 percent, to end at 1,331.85. The Nasdaq gained 21.26 points, or 0.74 percent, to close at 2,875.32.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, ended below 20.

Most key S&P sectors closed in positive territory, led by energy and financials.

“Europe is a place where there’s still a lot of room for negative developments,” said Joseph Trevisani, chief market strategist at Worldwide Markets on CNBC’s “Squawk Box.” “I don’t think the market grasps that the Germans are going to let this play out—they’re not going to come in and rescue the euro zone.”

Few experts expect much resolution from the EU's two-day meeting that starts Thursday. Earlier this week, German Chancellor Angela Merkel reiterated her oppositionto the common Eurobonds, an idea backed by France, Italy and Spain.

Europeanshares were up slightlywhile the euro was flat.

Italy's six-month borrowing costs roseto 2.957 percent to their highest since December, piling pressure on the government, which will push for concrete steps to ease market tensions at Thursday’s summit.

Arena Pharmaceuticals spiked higher after the FDA approved the company's anti-obesity drug Locaserin. The drug will be sold under the name "Belviq" and will be the first new weight-loss drug treatment in 13 years. Shares had been temporarily halted prior to the announcement. Rival obesity-drug makers Vivus and Orexigen jumped following the report.

Meanwhile, U.S. drug maker Bristol-Myers Squibb said its board authorized the repurchase of $3 billion of the company's common stock in addition to the $3 billion share buyback program it announced in 2010.

Several of Wall Street's largest investment delivered mixed ratingson Facebook's stock , almost a month after the social-networking giant's market debut.

Morgan Stanley, Wells Fargo, Piper Jaffray and JPMorgan initiated coverage of Facebook with an "overweight" rating. Goldman Sachs initiated coverage of the social-networking giant with a "outperform" rating, while BofA/Merrill Lynch set a "neutral" rating on the stock. Shares closed above $33 in the previous session. Barclays, Stifel Nicolaus and Citi placed a "hold" or equivalent rating on the stock.

Also on the tech front, a U.S. judge backed Apple'srequest to stop Samsungfromselling its Galaxy Tab 10.1 tablet in the U.S., giving the iPad maker a significant win in the global smartphone and tablet patent wars.

Google edged higher after the tech giant unveiled its own version of the tablet, Nexus 7, that will run on its latest version of its Android operating system. The new tablet will ship in mid-July starting at $199.

And Best Buy will be the subject of investor attention after sources said founder Richard Schulze is working with banks including Credit Suisse to explore apotential private buyout deal.

Natural gas futures jumped almost 5 percent, hitting multi-month highs, pushing shares of QEPResources and Cabot Oil higher.

Among earnings, Lennar jumped after the homebuilder posted results that beat Wall Street expectations and handed in a gain in new orders for the fifth-consecutive quarter.

General Mills slipped after the maker of cereals and snacks topped profit estimates, but full-year earnings forecast was lighter-than-expected. Monsanto edged higher after the agricultural biotechnology firm posted higher-than-expected earnings.

On the economic front, durable goods orders jumped 1.1 percent in May, according to the Commerce Department, following a revised 0.2 percent decrease in April. Economists surveyed by Reuters had expected a gain of 0.4 percent.

And pending home sales climbed 5.9 percent to 101.1, hitting a two-year high in May, according to the National Association of Realtors.

Weekly mortgage applications dropped 7.1 percent last week, according to the Mortgage Bankers Association.

Treasury prices slippedafter the government auctioned $35 billion in 5-year notes at a high yield of 0.752 percent and bid-to-cover of 2.61.

—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Coming Up This Week:

THURSDAY: GDP, jobless claims, 7-yr note auction, farm prices, EU summit, new Verizon mobile data plan, Sara Lee splits into two companies; Earnings from Family Dollar, Research In Motion, Accenture, Nike
FRIDAY: Personal income & outlays, Chicago PMI, consumer sentiment

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