US stocks inch higher

US stocks managed to extend their New Year’s rally to a third session on Wall Street today, edging higher in erratic trading as the tech sector rebounded on bullish news from chip maker Xilinx Inc.

The day’s fluctuations signalled that investors wanted to catch their breath after a strong start to the year.

The Dow Jones industrial average gained more than 160 points in the previous two sessions, and the Standard & Poor’s 500 index reached a four-and-a-half year high on Wednesday.

Many strategists say the market’s 2006 advance should continue.

“It still feels like people are thinking that stocks are still cheap relative to bonds,” said Phil Schlakman, head of global sales trading at JP Morgan Private Bank. “At this moment, sentiment still feels good, and I think there’s room for stocks to rally further.”

The Dow rose 2.00, or 0.02%, to 10,882.15.

Broader stock indicators closed higher. The S&P 500 rose 0.02, or virtually unchanged, to close at 1,273.48, and the Nasdaq composite index rose 13.41, or 0.59%, to end the day on 2,276.87.