By Rodrigo Campos
NEW YORK (Reuters) - U.S. stocks rose on Wednesday after buyers stepped in as the S&P 500 hit a more than two-month low, but concern about an escalation of the Russia-Ukraine conflict and two nixed deals weighed on sentiment.
The S&P 500 bounced back after hitting a technical level that has provided support various times this year.
Market reaction was initially muted after data showed the U.S. trade deficit narrowed more than expected in June to the lowest reading since January. JPMorgan and Goldman Sachs were among Wall Street banks that raised their previous and current quarter economic growth estimates on the back of that figure.
The market had opened lower after NATO said Russia has around 20,000 combat-ready troops on Ukraine's eastern border and could use the pretext of a humanitarian or peace-keeping mission to invade.
A further souring of relations between Russia and the West could hurt the European economy, already struggling to recover from a deep recession. Data on Wednesday showed German industrial orders dropped in June at their steepest rate since September 2011 and Italy's economy unexpectedly slid back into recession in the second quarter.
The situation with Russia "is certainly going to spook the market and we saw a little of that yesterday," said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, speaking of Tuesday's afternoon selloff.
"As far as the broad market goes, we haven?t had a pullback of any size since April. Every time we see a little weakness, people tend to step in and buy, primarily because they have cash out there to put to work and there?s not a lot of places for that,? he said.
The Dow Jones industrial average rose 28.6 points or 0.17 percent, to 16,458.07, the S&P 500 gained 3.44 points or 0.18 percent, to 1,923.65 and the Nasdaq Composite added 15.59 points or 0.36 percent, to 4,368.42.
The S&P hit its session low just below the 100-day moving average, breaching it for the first time since April 15. The index has closed below it only four times this year, three in February and one in April, making it a strong technical support.
Time Warner Inc was the largest decliner on the S&P 500 after Rupert Murdoch's Twenty-First Century Fox withdrew its $80 billion offer to buy the media company. Time Warner shares slid 12.2 percent to $74.77 despite reporting better-than-expected results, while Fox rose 5.1 percent to $32.90.
Sprint fell 18.7 percent to $5.92 and T-Mobile dropped 6.7 percent to $31.63 after a proposed deal between them also fell through.
Walgreen Co shares fell 12.2 percent to $60.66 after it said it wouldn't use a full takeover of Europe's biggest pharmacy chain Alliance Boots to move its domicile overseas, following fierce criticism of such tax-cutting deals at home.
Shares of Cognizant Technology fell 12.5 percent to $43.74 after the IT services provider said it expected slower full-year sales growth than previously forecast.
Groupon shares tumbled 16.1 percent to $5.93 a day after it slashed its full-year profit outlook.
Utilities were the largest percentage decliner among the S&P industry sectors with a 1.4 percent drop. At its session low, the sector index was down 9.8 percent from its all-time intraday high set June 30 - just shy of entering correction territory after leading the market higher in the first half of the year.
(Editing by Bernadette Baum and Nick Zieminski)
