Stocks rose slightly on Tuesday, but with the outcome of discussions on a bailout package for Greece uncertain, investors are unlikely to make big bets in coming days.
The S&P has gained almost 7 percent in 2012 on better-than-expected economic figures, boosting bellwethers such as Microsoft Corp to yearly highs and Apple Inc to a record high.
In a sign of underlying confidence, the 10-day moving average of stocks posting 52-week highs on the NYSE is at 203, the highest level since May 2010, according to Thomson Reuters Datastream. The 10-day moving average of stocks hitting 52-week lows has dropped to just eight.
Still, the market continues to watch the euro zone for any sign of a setback in resolving the sovereign debt crisis.
There's a tug of war between fundamentals, which are improving, and the macro backdrop of geopolitical risk from Europe, said Andrew Goldberg, market strategist at J.P. Morgan Funds in New York. We're still waiting on Greece, but at the same time we're almost being forced to pay attention to the improving data.
Greece's government is preparing a document with a list of painful reforms needed to clinch a new, 130-billion-euro bailout
financing package that is critical to the country avoiding a disorderly default. Political parties on Tuesday again delayed making a decision on accepting the reforms.
A disorderly Greek debt default would almost certainly lead to increased fiscal problems for weaker members of the euro zone and would risk wreaking havoc in credit markets. The impact could also dampen the U.S. recovery.
Boosting the Dow, Coca-Cola Co rose 0.8 percent to $68.55 after it reported better-than-expected quarterly results and announced a cost-savings program.
Fellow Dow component Microsoft climbed 0.5 percent to $30.35 while Apple rose 1.1 percent to $468.83.
The Dow Jones industrial average <.DJI> was up 33.07 points, or 0.26 percent, at 12,878.20. The Standard & Poor's 500 Index <.SPX> was up 2.72 points, or 0.20 percent, at 1,347.05. The Nasdaq Composite Index <.IXIC> was up 2.09 points, or 0.07 percent, at 2,904.08.
The benchmark S&P 500 index last week marked a fifth straight week of gains on the back of improving U.S. economic data, capped by Friday's payrolls report. Accommodative monetary policy around the world has also helped to fuel the rally.
Technical analysts say that improved medium-term momentum indicators such as a recent move of the S&P 500's 50-day moving average above its 200-day moving average should mean more gains for stocks in the coming months.
Shares of money-market fund operators took a hit on Tuesday after The Wall Street Journal reported that the U.S. Securities and Exchange Commission was finalizing rules meant to stabilize the $2.7 trillion money-market mutual fund sector, including allowing the net asset value of funds to fluctuate.
Shares of Federated Investors Inc , whose high percentage of money-market funds makes it vulnerable to changes in fund rules, fell 3.3 percent to $18.03.
Shares in Charles Schwab Corp , another large money-fund provider, fell 2.8 percent to $12.34 on heavy volume.
Walt Disney Co fell 1.3 percent to $40.46 in extended trading after it reported weaker-than-expected revenue for its fiscal first quarter.
Emerson Electric Co dipped 2.7 percent to $51.92 after it reported lower quarterly sales and earnings as last year's floods in Thailand disrupted supply chains and weak European economies hurt demand.
According to Thomson Reuters data through Tuesday morning, of the 301 companies in the S&P 500 posting results so far, 60 percent topped expectations, tracking below recent quarters at this point of the reporting season.
Earnings are certainly weaker than prior quarters, especially for companies with overseas exposure, but at the same time that's something that isn't unexpected when you consider the headwinds, Goldberg said.
Swiss bank UBS predicted more weakness in investment banking after a restructuring of the business failed to prevent an earnings hit from the euro-zone debt crisis and worries about the global economy. UBS shares dipped 0.7 percent to $14.27 in New York trade.
Federal Reserve Chairman Ben Bernanke on Tuesday renewed a pledge to prevent Europe's financial crisis from damaging the U.S. economy in testimony before Congress that mirrored remarks he made last week.
About 54 percent of stocks traded on the New York Stock Exchange ended in positive territory while on the Nasdaq slightly more stocks fell than rose. Volume was light, with about 6.48 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 7.84 billion.
(Editing by Leslie Adler)