The U.S. stock market eked out a modest gain ahead of an important resistance level for the S&P 500 Index and a Chinese CPI report, which market participants will use to gauge the likelihood of a rate hike in the near future.    

The S&P 500 closed up 5.17 points, or 0.45 percent, at 1,145.61.  The Dow Jones Industrial Average closed up 2.95 points, or 0.03 percent, at 10,567.33.  The Nasdaq Composite closed up 0.78 percent.

Financials, tech, and transportation were the best performing sectors.  Impressive gains by big banks and recovering crude oil price helped the market end positive for the day. 

2010 High

The Nasdaq broke its 2010 high last week and the Dow and S&P 500 are set to challenge theirs later this week. 

With important U.S. economic releases on Thursday and Friday, investors will watch closely to see if the S&P 500 can break above the January 15 high of 1,150. 

The index traded as high as 1,148.26 on Wednesday.

Chinese CPI

Investors will eye China's CPI, which will be released early in the Asian session on Thursday, to gauge inflation and determine if the government will raise interest rates soon. 

Concerned with inflation, Chinese authorities have already raised the nation's bank reserve ratio twice in 2010.  An interest rate hike is expected to be the next step of monetary tightening.

In 2010, world markets have generally declined on any news of Chinese monetary tightening.

Big Banks

Big banks in the U.S. performed well on Wednesday.  Citigroup (NYSE:C) led with a gain of 3.66 percent.  Bank of America (NYSE:BAC) closed up 1.85 percent. Wells Fargo (NYSE:WFC) rose 2.04 percent. Goldman Sachs (NYSE:GS) was up 1.83 percent.

According to a Reuters report, these stocks rose because of momentum bets and short-covering on hopes the entities were on the road to recovery.

Banks also rose on the expected healthy demand for Citigroup's issuing of its trust preferred securities (TruPS), paving the way for other banks to raise capital using similar methods. 

Oil

Oil futures have been volatile on Wednesday, boosting the stock market when they gained and dragging the stock market lower when they declined. 

At the closing of the U.S. stock market, NYMEX oil futures were trading at $81.88, up 0.48 percent for the day.  Earlier, futures traded as high as $83.03 and as low as $80.81.

Energy stocks are modestly up, with Exxon Mobil (NYSE:XOM) up 0.66 percent and ConocoPhillips (NYSE:COP) up 1.22 percent.

OPEC revised its outlook for global oil demand on Wednesday.  It expects demand to grow by 900,000 barrels per day, which is 100,000 higher than its February outlook. 

EIA also released a report at 10:30 a.m. EST showing lower than expected U.S. oil inventories and growing gasoline consumption.