Stocks rose on Thursday as investors bought on sporadic dips in a market roiled by conflicting comments from Washington about high-stakes negotiations to solve the "fiscal cliff."
Wall Street reversed early gains and fell shortly after John Boehner, the top Republican in Congress, poured cold water on hopes that lawmakers were getting closer to a budget deal that would avert a possible recession next year. But the market rebounded by afternoon and the three major indexes were near the session highs.
"There is an emotional part in buying on the small dips here. Investors are more worried about missing the rally than losing money as they believe that the 'fiscal cliff' will be solved eventually," said James Dailey, portfolio manager at TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
"Until the 'fiscal cliff' is solved, the madness of the crowd will not subside."
Discussions on Capitol Hill are aimed at avoiding big, automatic spending cuts and tax hikes, known as the "fiscal cliff," that will begin taking effect beginning in January.
Boehner's comment about a lack of progress in talks with the White House was one of a series of contrary pronouncements by lawmakers and the Obama administration over whether Washington will finally cut a deal.
There have been some signs that leaders are moving closer to a fiscal agreement. The S&P 500 has gained about 5 percent after dropping almost 8 percent since the November 6 U.S. election. But investors remain wary that ad hoc statements from politicians can spark quick reversals in the market.
The Dow Jones industrial average <.DJI> was up 50.32 points, or 0.39 percent, at 13,035.43. The Standard & Poor's 500 Index <.SPX> was up 7.29 points, or 0.52 percent, at 1,417.22. The Nasdaq Composite Index <.IXIC> was up 19.32 points, or 0.65 percent, at 3,011.10.
U.S.-listed shares of BlackBerry maker Research In Motion surged 5 percent to $11.66 after Goldman Sachs upgraded the stock to "buy" from "neutral" on optimistic ahead of the launch of the BlackBerry 10 smartphone.
Shares of top retailers retreated in the wake of data showing a weak start to November sales after superstorm Sandy. Target fell 0.5 percent to $62.49 percent and Kohl's Corp dropped 10.4 percent to $45.83.
The U.S. economy grew faster than initially thought in the third quarter as businesses restocked, but consumer and business spending were revised lower in a sobering reminder of the economic recovery's underlying weakness.
Gross domestic product expanded at a 2.7 percent annual rate in the quarter, the Commerce Department said, as export growth helped offset the weakest consumer spending and first drop in business investment in more than a year.
Contracts to buy previously owned U.S. homes rose more than expected in October, a sign the housing market recovery advanced into the fourth quarter despite a mammoth storm and concerns over looming tax hikes.
Shares of companies that build homes rose. The PHLX housing index <.HGX> rose 0.5 percent, shedding some earlier gains in line with the pullback in the broader market.
Tiffany shares slumped 6.6 percent to $59.52 after the upscale jeweler reported quarterly results and cut its full-year sales and profit forecasts.
Although domestic events largely dominated investors' attention, the euro zone debt crisis is still on the radar. The yield on Italy's 10-year bonds fell to the lowest in two years at an auction on relief that international lenders reached agreement this week to reduce Greece's debt by more than 40 billion euros.
(Editing by Kenneth Barry)