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The markets got a lift from a sudden rally in financial shares at the tail end of the session as market participants worked to overcome worries that European leaders may not deliver on pledges to unveil a credible solution to the debt crisis.
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The Dow Jones Industrial Average rose 46.2 points, or 0.38%, to 12,196, the S&P 500 gained 2.5 points, or 0.2%, to 1,261 and the Nasdaq Composite dipped 0.35 point, or 0.01%, to 2,649.
Europe has emerged as the central theme of the week, with the key meeting of policymakers now looming just two days away, and little economic data slated for release.
The trading day was jerky, with the Dow crossing the zero mark 25 times. Wednesday marked the fifth-straight day the blue chips didn't end with a triple digit move -- the first such streak since July in a sign of the recent volatility.
Financial names like JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) performed the strongest in the end. Energy shares struggled and under-performed other sectors on a bearish oil inventory report from the Energy department.
U.S. government bonds prices were up, which pushed yields lower. The benchmark 10-year Treasury note yields 2.030% from 2.093%.
Europe in the Spotlight
People who closely monitor the situation in Europe warn that such summits have disappointed investors and roiled markets in the past. Indeed, a German official said Wednesday the country doesn't expect all 27 European Union nations to agree to treaty changes that would force closer fiscal ties, according to multiple media reports. Adding to the pressure, Standard & Poor's warned the entire European Union that its top-notch credit rating is on warning for a downgrade late on Wednesday.
However, in a separate release, the governments of Germany and France, Europe's biggest economic players, noted that if the entire EU doesn't agree to the changes, they will push the 17-member euro area to support the pact.
"This is the one chance [European leaders] have to save the single currency," Peter Dixon, global equities economist at Commerzbank, said in an interview with FOX Business.
A report by the Financial Times on Tuesday afternoon that the eurozone may be planning on doubling the firepower of its rescue facility was taken a good sign, however.
"Our expectations remain low" that a solution will be drafted that prompts the European Central Bank to embark on a balance sheet expansion that provides "a clear path towards resolving the debt crisis," analysts at Nomura wrote in a note to clients on Wednesday.
To that end, traders are also expected to pay close attention to an ECB meeting on Thursday to see what, if any, measures the central bank plans on taking to ease the crisis. Last week, the ECB, the Federal Reserve and several other global central banks unveiled a united plan to ease conditions in the money markets. The move sparked a massive rally, but many economists caution it may fight the symptoms, and not the actual sickness.
Banks based in Europe, such as Lloyds (NYSE:LYG), UBS (NYSE:UBS) and Royal Bank of Scotland (NYSE:RBS) were slammed on the worries but made a strong recovery. European blue chips fell 0.49%, while the euro gained 0.07% to $1.3410. The U.S. dollar climbed 0.16% against a basket of six world currencies.
Energy markets came under pressure after fresh data from the Energy Department showed an unexpected increase in crude oil inventories, and a much larger-than-expected surge in gasoline stocks. Generally, unexpectedly high supply is seen as a bearish indicator, and puts negative pressure on prices.
The benchmark crude oil contract traded in New York slipped 78 cents, or 0.78%, to $100.49 a barrel. Wholesale RBOB gasoline tumbled 6 cents, or 2.2%, to $2.59 a gallon.
In metals, gold rose $1.70, or 0.09%, to $1,733 a troy ounce.
AT&T (NYSE:T) said it expects record smartphone sales for the fourth quarter, already selling 4 million in the first two months of the period. The telecom also said it is still pursuing its acquisition of T-Mobile USA from Deutsche Telekom.
European blue chips fell 0.49%, the English FTSE 100 dipped 0.38% to 5,548, and the German DAX slumped 0.52% to 5,998.
In Asia, the Japanese Nikkei 225 rallied 1.7% to 8,722 and the Chinese Hang Seng jumped 1.6% to 19,241.