The Dow rose about 8 points, closing higher for the second session in a row
Mark Lennihan / AP / File
Stocks ended modestly higher after fluctuating in the final hour of trading as investors shrugged off further evidence of a slowing economy.
The Dow Jones Industrial Average rose 8.10 points, or 0.07 percent, to close at 12,402.76, rising for a second straight session.
Merck, meanwhile, was among the leading blue chip laggards after news of a government drug study that dismissed the effectiveness of giving patients with heart disease a high dose of niacin in addition to a statin. The study used Abbot Laboratories' Niaspan and Merck's Zocor, a statin.
The S&P 500 rose 5.22 points, or 0.4 percent, to close at 1,325.69, while the tech-heavy Nasdaq gained 21.54 points, or 0.78 percent, to close at 2.782.92. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell to nearly 16.
Among key S&P 500 sectors, consumer discretionary and telecom rose, while utilities fell.
News on the economic front pointed to continued weakness in the U.S. Investors had hoped initial claims for unemployment would fall, indicating the jobs market was picking up, but claims rose, and the second reading of first quarter economic growth didn't improve as expected. GDP remained at a sluggish 1.8 percent.
The fact the economic numbers have been disappointing indicates the Federal Reserve may continue to be generous in some form after the Fed's bond purchases to stimulate the economy, known as quantitative easing, ends in June, said Peter Cardillo, chief market economist at Avalon Partners.
At the same time, corporate profits were strong in the second quarter, and "that trend is going to continue," Cardillo said. "That brings us down to one simple factor, and that is, there is no place to put your money other than equities."
Cardillo does, however, also think gold prices will continue to rise over the next six to eight months, reaching $1,800 an ounce.
The economic headwinds, combined with the uncertainty surrounding how the economy will respond to the end of quantitative easing, could send stocks tumbling more in the weeks ahead, however, said David Katz, senior portfolio strategist at Weiser Capital Management.
Katz doesn't expect the market to fall as much as it would in a recession, but he does expect a downdraft. And that downdraft will present buying opportunities, he said.
"Cash that's on the sideline waiting for the next dip will be put to work" Katz said.
Most of Weiser Capital Management's clients have 5 to 20-percent cash at any point, he said. The firm was buying bigger tranches when the market tumbled in late 2008 through 2009, and they are "taking much smaller chunks now," Katz said. "I think we will have an opportunity to take healthier bites in the coming quarters."
The euro rose against the dollar after news China may buy “bailout bonds” for Portugal although concerns about the future of Greece's restructuring efforts continued to worry investors. Meanwhile, Maria Damanaki of Greece, and head of Fisheries at the European Commission, said Greece may be forced out of the euro if it can't accomplish tough austerity measures.
On the earnings front, Sony fell slightly after the Japanese electronics maker posted a jump in net losses from a write-off, but expects a profit for its current financial year. The company's earnings continue to be affected by the March earthquake and tsunami in Japan as well as cyber attacks of its PlayStation Network.