NEW YORK – Stocks mostly rose on Wednesday, boosted by a rally in bank shares, though a steep drop in Apple limited the advance and kept the Nasdaq in negative territory.
Trading was volatile, with the S&P 500 dropping into negative territory at one point and the Nasdaq falling more than 1 percent before rebounding. The Dow, which doesn't contain Apple Inc as a component, climbed 1 percent by midday.
Apple, the largest U.S. company by market capitalization and a big weight in both the S&P 500 and the Nasdaq, fell 4.7 percent to $548.88. Apple is down more than 22 percent from an all-time high reached in late September.
The S&P 500 reversed course after briefly falling below the 1,400 level, seen as a key support point over the past two weeks.
"There's still psychological interest in buying the market," said John Brady, managing director at R.J. O'Brien & Associates in Chicago. At the 1,400 level, "we find again ���dip buyers' there. They strongly believe a deal (on the fiscal cliff) is going to get done."
For several weeks, investors have reacted quickly to whiffs of sentiment from Washington in headlines about negotiations between the White House and congressional leaders over a deal on how to avoid the "fiscal cliff" - a series of mandatory spending cuts and tax increases effective in early January that could push the U.S. economy into recession next year.
President Barack Obama told the Business Roundtable, a group of chief executives, on Wednesday that a fiscal cliff deal was possible "in about a week" if Republicans acknowledged the need to raise taxes on the wealthiest Americans.
The Dow Jones industrial average was up 115.44 points, or 0.89 percent, at 13,067.22. The Standard & Poor's 500 Index was up 5.71 points, or 0.41 percent, at 1,412.76. But the Nasdaq Composite Index was down 13.75 points, or 0.46 percent, at 2,982.94.
Apple's slide weighed heavily on the Nasdaq. Market participants cited a host of reasons for the drop in the iPad maker's stock, including a consultant's report about the company losing share in the tablet market and reports that margin requirements had been raised by at least one clearing firm.
Apple has "to hit another home run to get $700 again," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago. "They need another new product that hits it out of the park. Without that, they could get a gradual grind-down in confidence ... this is not going to be a short-term trend."
On the upside, The Travelers Cos Inc rose 5.1 percent to $74.111 and ranked as the Dow's top gainer after the property and casualty insurance company said its preliminary estimate of net losses from Superstorm Sandy was about $650 million after tax.
Banks were also strong, with the S&P financial sector index climbing 1.5 percent. The rally was led by a 7.3 percent climb in Citigroup to $36.79 after the company said it would cut 4 percent of its workforce in a cost-cutting move. The KBW Bank Index rose 2 percent.
Bank of America shares shot up 6.1 percent to $10.51, just a touch off a new 52-week high at $10.52.
Freeport-McMoRan Copper & Gold Inc fell 15.2 percent to $32.47 as the S&P 500's biggest percentage decliner. The company said it was acquiring Plains Exploration & Production Co and McMoRan Exploration Co in two separate deals for $9 billion in cash and stock in a major expansion into energy.
McMoRan Exploration soared 83.6 percent to $15.53 and Plains Exploration & Production surged 24.4 percent to $44.83.
Economic data from payrolls processor ADP showed U.S. private-sector hiring took a hit in November due to the impact of Superstorm Sandy, which ravaged consumers and businesses in the Northeastern United States, but the huge services sector kept expanding albeit at a modest pace, according to the Institute for Supply Management.
(Additional reporting by Rodrigo Campos; Editing by Jan Paschal)