One year to the day after stocks fell to their worst close in more than 12 years, the US market spent most of Tuesday spinning its wheels.
Major US averages ended slightly higher as falling commodity prices pressured materials stocks, offsetting gains in the telecom and industrial sectors.
But the weakest financial companies dominated market activity, as Citigroup Inc, American International Group and others ran up on strong volume amid speculation that regulators could consider clamping down on short sales of specific issues.
"There's a huge rotation taking place today into financials, telecoms and some of the underperforming areas of the market," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
"The market is in an up trend here, pushing toward her highs."
The Dow Jones industrial average gained 11.86 points, or 0.11 per cent, to 10,564.38. The Standard & Poor's 500 Index edged up 1.95 points, or 0.17 per cent, to 1140.45. The Nasdaq Composite Index rose 8.47 points, or 0.36 per cent, to 2340.68.
One year ago, the economic crisis dragged stocks to their lowest in more than 12 years. The S&P 500 is up 68.5 per cent since then --the strongest one-year rally since 1936, according to Standard & Poor's, but still 27.6 per cent below its all-time high.
The KBW bank index rose 0.6 percent with top gains coming from Capital One Financial, up 2.1 per cent at $US38.66. Citigroup Inc shot up 7.3 per cent to $US3.82, the largest daily percentage gain since last August.
Shares of telecommunications and Internet devices companies rose after Cisco Systems Inc unveiled a higher capacity router that AT&T Inc, the biggest US telecom company, said it had successfully tested.
Cisco, which gained almost 4 per cent Monday on anticipation of the announcement, was flat, ending at $US26.13, while the S&P telecommunications index gained 1.2 per cent. Apple Inc, maker of the iPhone, rose 1.8 per cent to $US223.02, after earlier hitting a fresh lifetime high at $US225.00.
Airline stocks jumped as major US carriers said they would continue to explore new fees and cost-cutting measures to enhance profitability, and demand for business travel picked up.
AMR Corp, parent of American Airlines, rose 9.3 per cent to $US9.77, and UAL Corp, parent of United, gained 3.6 per cent to $US18.15. The Arca Airline index jumped 2.9 per cent.
Also lifting transports' shares, Morgan Stanley reiterated its upbeat view on railroads while raising its price target on Union Pacific Corp and CSX Corp.
Union Pacific rose 1.9 per cent to $US70.84 and CSX added 1 per cent to $US49.52, while the Dow Jones Transportation Average gained 1.3 per cent.
Kroger Co fell 2.4 percent to $US22.35 after the biggest US grocery chain said fiscal-year earnings could miss expectations as it posted higher-than-expected quarterly profit.
Also lower was Texas Instruments Inc, which said late Monday it was struggling to fill orders due to increased demand for microchips, but raised its forecasts. The stock fell 2 per cent to $US24.19.
The US economy is slowly recovering from the worst economic downturn since the 1930s, with the latest data showing the economy may be on the verge of creating jobs and a majority of companies reporting stronger-than-expected earnings.
About 9.24 billion shares were traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, Stock Exchange, the American Stock Exchange and Nasdaq, slightly below last year's estimated daily average of 9.65 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 4 to 3, while on the Nasdaq, about five stocks rose for every four that fell.