U.S. stocks edged higher on Wednesday as gains in financial and technology stocks offset declines caused by a recent surge in bond yields.

Bank stocks have risen 10 percent since the start of the month as benchmark yields have climbed enough to make lending and trading more profitable.

What's giving the financials a little boost is a more positively sloped yield curve, which means better profit for them, said Joseph Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania.

Yields reached a six-month high this week after the initial deal reached in Washington to extend tax cuts fueled concern about inflation and the government's debt burden.

JP Morgan Chase & Co gained 2.6 percent to $40.27. The KBW Bank index <.BKX> climbed 2.9 percent.

By the same token, the higher bond yields capped gains on the major stock indexes as they 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.

Technology shares helped lift the Nasdaq, led by semiconductor stocks after solid outlooks from Texas Instruments Inc and Novellus Systems Inc .

Texas Instruments gained 1 percent to $33.75 while Novellus climbed 2 percent to $32.40. The PHLX Semiconductor index <.SOX> rose 1 percent.

On the Dow, McDonald's Corp was the biggest drag, falling 2 percent to $78.74 after reporting weaker-than-expected global sales for November.

The Dow Jones industrial average <.DJI> gained 13.32 points, or 0.12 percent, to 11,372.48. The Standard & Poor's 500 Index <.SPX> gained 4.53 points, or 0.37 percent, to 1,228.28. The Nasdaq Composite Index <.IXIC> gained 10.67 points, or 0.41 percent, to 2,609.16.

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.

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.

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.

Volume was light with about 7.9 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below the year-to-date moving average of 8.63 billion.

Declining stocks outnumbered advancing ones on the NYSE by 3 to 2, while on the Nasdaq, decliners slightly beat advancers 1321 to 1316.

(Reporting by Chuck Mikolajczak; additional reporting by Caroline Valetkevitch; Editing by Kenneth Barry)