Stocks rose on Tuesday, led by defensive sectors, in a sign the cash piles moving into the market recently are being put to use by cautious investors to pick up more gains.
The S&P 500 is on track to post its best monthly performance since October 2011 as investors poured $55 billion in new cash into stock mutual funds and exchange-traded funds in January, the biggest monthly inflow on record.
Among rising defensive shares, which are companies relatively immune to economic swings, were drugmaker Pfizer, up 1.2 percent to $27.16 and AT&T (T.N), 1.5 percent higher to $34.64.
The S&P hovered near 1,500, and market technicians say the benchmark is at a turning point which will determine if the index will keep moving higher or find it difficult to break through, resulting in a move lower in the near term.
"Cyclicals were moving very nicely, now you see balance with some of the defensives. Many managers use that as an internal hedge in equity portfolios," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.
She said the market is cautious ahead of Wednesday's statement following the Federal Reserve's two-day meeting. In addition, defensive stocks would hold up better if Friday's payrolls report surprises on the downside.
The Dow Jones industrial average .DJI rose 57.42 points or 0.41 percent, to 13,939.35, the S&P 500 .SPX gained 4.88 points or 0.33 percent, to 1,505.06 and the Nasdaq Composite .IXIC dropped 3.24 points or 0.1 percent, to 3,151.06.
The top performing sectors on the S&P 500 were healthcare .SPXHC and telecom services .SPLRCL, both up more than 1 percent.
The equity gains have largely come on a strong start to earnings season, though results were mixed on Tuesday with Pfizer rising but Ford Motor Co (F.N) dropping after its report.
Both companies reported profits that topped expectations, but Ford also forecast a wider loss in its European segment. Shares dropped 3.6 percent to $13.32 as one of the biggest percentage losers on the S&P 500.
Thomson Reuters data showed that of the 174 companies in the S&P 500 that have reported earnings this season, 68.4 percent have been above analyst expectations, which is a higher proportion than over the past four quarters and above the average since 1994.
The Nasdaq was pressured by disappointing outlooks from Seagate Technology (STX.O) and BMC Software (BMC.O). Seagate shares lost 8.3 percent to $34.30 and BMC fell 8.5 percent to $40.70.
Software maker VMware Inc (VMW.N) lost 20 percent to $78.26 also after a cautious 2013 outlook.
Amazon (AMZN.O) was the biggest drag on the Nasdaq with a 2 percent drop to $270.57 before its results, expected after the closing bell.
U.S. home prices rose in November to rack up their best yearly gain since the housing crisis began, a further sign that the sector is on the mend, but consumer confidence fell to its lowest level in more than a year in the wake of higher taxes for many Americans.