Stocks were little changed on Wednesday, with investors staying cautious on a strong dollar and higher bond yields, but analysts didn't rule out a year-end rally.

Benchmark yields hovered at their highest in six months, while the dollar index <.DXY> gained 0.4 percent as the deal to extend tax cuts fueled concern about inflation and the costs of the government's debt burden.

Bond yields trimmed some of their gains following a $21 billion Treasury auction, boosting stocks slightly.

Higher bond yields make it more expensive for consumers and businesses to borrow, while stocks and the dollar have moved in opposite directions of late. A rise in yields and the dollar could also draw money away from equities.

I think rates would have to be a lot higher to impact corporations' bottom lines. But, at the same time, when the market sees rates going higher, that's certainly a negative for corporations on the whole, said Thomas Villalta, portfolio manager for Jones Villalta Asset Management in Austin, Texas.

The Dow Jones industrial average <.DJI> was up 6.70 points, or 0.06 percent, at 11,365.86. The Standard & Poor's 500 Index <.SPX> was up 2.93 points, or 0.24 percent, at 1,226.68. The Nasdaq Composite Index <.IXIC> was up 8.43 points, or 0.32 percent, at 2,606.92.

Some analysts expect the market to trade sideways for a few days before mounting an upward move heading into the year's end.

Bob Doll, chief investment strategist at BlackRock, told the Reuters 2011 Investment Outlook Summit Wednesday the deal to extend the Bush-era tax cuts should accelerate the move of cash into equities and out of fixed income.

On the Dow, McDonald's Corp was the biggest drag, falling 2.7 percent to $78.14 after reporting weaker-than-expected global sales for November.

The S&P faces resistance at the 1,228 level, which represents the 61.8 percent Fibonacci retracement of the 2007-2009 bear market slide, a key technical indicator. The level was confirmed as strong resistance Tuesday after the index broke through during the session but closed below it.

The S&P 500 hit a two-year intraday high on Tuesday, but closed the session with only a small gain.

Steady economic improvement should fuel stock gains through 2011, according to a Reuters poll of investors and strategists, but international concerns could limit advances in the second half of the year.

The median forecast from 50 respondents in the U.S. poll was for the S&P 500 to end 2011 at 1,325.

(Reporting by Caroline Valetkevitch; Editing by Kenneth Barry)