Jan. 9, 2013 at 12:05 PM ET
Stocks held near session highs Wednesday, recovering from two days of declines, after Dow component Alcoa kicked off the fourth-quarter earnings season on a positive note.
The S&P 500 and the Nasdaq also rose. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, slid near 13, plummeting more than 40 percent in the last two weeks. (Read More: Why VIX's Recent Plunge May Be Bad for Stocks)
Most key S&P sectors were in positive territory, led by industrials and health care, while energy slipped.
Alcoa climbed after the aluminum producer hit its earnings target and topped revenue expectations. The company also said it expects global aluminum demand to rise to 7 percent in 2013, up from 6 percent in 2012. In addition, at least two brokerages raised their price target on the company.
"Alcoa's results are generally considered a bellwether for the global economy and the fact that the aluminium giant forecasts higher demand in 2013 appeased investors," Chris Weston, a trader at IG Markets wrote in a note.
Still, investors remained cautious over the fourth-quarter earnings season as estimates have been sharply lowered from where they were last October. Earnings are expected to grow by 2.7 percent, according to Thomson Reuters data.
But analysts say the lowered expectations leave room for companies to surprise to the upside even if results aren't stellar.
In December, hedge fund manager Bill Ackman of Pershing Square outlined his case for shorting the nutrition and skin-care products company. Ackman also criticized Herbalife, saying the company is a "pyramid scheme" that has grown rapidly without demonstrating "much substance" to justify the growth.
Morgan Stanley plans to cut 1,600 jobs, or approximately 6 percent of its workforce, in its investment banking unit, according to sources. The latest round of cuts comes in addition to a 6 percent reduction last year.
Boeing's 787 Dreamliner jet suffered a third mishap this week after Japan's All Nippon Airways said it canceled a 787 Dreamliner flight due to brake problems. The latest problem follows a fuel leak on Tuesday that forced a Japan Airlines 787 aircraft to cancel take-off at Boston's Logan International Airport, a day after a different JAL 787 aircraft caught fire after a flight to Boston from Tokyo. Still, shares of Boeing rallied, rebounding from two days of declines. (Read More: Airlines Stick With Boeing 787 Despite 'Teething Problems')
Clearwire received an unsolicited takeover bid of $3.30 a share from Dish Network. Sprint Nextel already has an agreement to acquire 50 percent of Clearwire it doesn't already own for $2.97 a share. Clearwire said its ability to enter other transactions is limited by other arrangements, but that it has a fiduciary duty to discuss the Dish offer.
Facebook crossed above $30 a share for the first time in six months after the social-networking giant sent out a press event invitation for next week at its Menlo Park campus. The invitation has some buzzing about a phone, while others speculate it could be a search engine.
Also among earnings, Apollo Group plunged to lead the S&P 500 decliners after the for-profit education company posted lower enrollment rates for the third-consecutive quarter and slashed its operating profit estimates for 2013.
Constellation Brands rallied after the wine company topped earnings expectations and boosted its forecast for the second time this fiscal year. Warehouse club operator PriceSmart is schedule to post earnings after the closing bell.
Weekly mortgage applications rose last week, rebounding from three consecutive weeks of declines, according to the Mortgage Bankers Association.
The Treasury is set to auction $21 billion in 10-year notes with the results available shortly after 1pm ET. A total of $66 billion in 3-year, 10-year and 30-year notes will have been issued by the end of this week.
Technology stocks will be in focus as the Consumer Electronics Show continues in Las Vegas. Reuters reported that one of Microsoft's top Windows executives said at the show that the group has sold 60 million licenses and upgrades for its Windows 8 operating system in the 10 weeks since its launch.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
WEDNESDAY: 10-yr note auction; Earnings from PriceSmart
THURSDAY: Jobless claims, wholesale trade, natural gas inventories, Fed's George speaks, 30-yr bond auction, Fed's Bullard speaks, Fed's balance sheet, money supply, Fed's Kocherlakota speaks, Herbalife analysts day, videogame sales data release; Earnings from Chevron (interim report), Ruby Tuesday
FRIDAY: International trade, import and export prices, Fed's Plosser speaks, Treasury budget, Best Buy to report holiday sales; Earnings from Wells Fargo
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