A significant rally on Wall Street nearly evaporated on Thursday as crude oil prices and worries about investment banks almost overwhelmed what had started as a very promising day. 

Today's Markets

The Dow Jones Industrial Average gained 57.81 points, or 0.48% to 12141.58, the Standard & Poor’s 500 index rose 4.38 points, or 0.33%, to 1339.87 and the Nasdaq Composite Index picked up 10.34 points, or 0.43%, to 2404.35. The consumer-friendly Fox 50 rose 0.33 points, or 0.03%, to 944.82.

Following Wednesday's 200-point selloff on the Dow, the market posted a modest rebound on a change at the top of Lehman Brothers (LEH), better-than-expected retail sales and some M&A news. However, the rally lost a lot of steam Thursday afternoon as pessimistic market sentiment and a resurgence for crude oil sent the market briefly into negative territory before it recovered. 

“People’s mentality right now is to be selling up moves. It took a little longer than I thought it would today. I'm not surprised because the market is just too fragile," said Michael James, senior equity trader at Wedbush Morgan Securities in Los Angeles. 

Microsoft (MSFT) led the advancing stocks on the Dow after Yahoo! (YHOO) announced that buyout talks between the two companies have ended without a deal. Financial giants Citigroup (C) and JPMorgan Chase (JPM) also ended the day near the top of the Dow. On the downside, aluminum company Alcoa (AA) slid more than 4% to lead the decliners on the index. 

The Nasdaq Composite ended its four-day losing streak on Thursday, rising almost 0.5%. Chip maker Qualcomm (QCOM) led the Nasdaq 100, jumping about 6% after it boosted its third-quarter outlook. On the other hand, tech giant Apple (AAPL) slumped more than 4%.

The market has pulled back in recent weeks as Wall Street worries that the economy may not be able to rebound during the second half of the year. 

“We really haven’t discounted a slow growth economy for much beyond a quarter or two. We are not turning the corner, we are still kind of in the muck," said Paul Nolte, director of investments at Hinsdale Associates. 

Peter Cardillo, chief market economist at Avalon Partners, said he believes the Dow is "destined" to dip back below the psychologically-important mark of 12,000 and sink to the lowest levels of the year. 

Crude oil helped cool the market's rally, ending up 36 cents at $136.74 a barrel. Earlier in the day crude had been more than $4 in negative territory on a weaker U.S. dollar. However, the commodity rallied back, closing higher on supply threats in Nigeria and general bullish sentiment.

Much of the talk on Wall Street Thursday surrounded the latest moves by Lehman Brothers to combat weakening confidence on Wall Street and amongst shareholders. The nation's fourth-largest investment bank announced internal replacements for both CFO Erin Callan and COO Joseph Gregory but wasn't able to close higher, falling for the for the fifth straight day.

The moves come just a few days after it announced a quarterly loss of $2.8 billion, its first loss since the company went public in 1994, and plans to raise $6 billion in capital to shore up its balance sheet. On the same day Lehman released plans to raise another $6 billion in capital to shore up its balance sheet.

The rest of the financial sector recovered on Thursday as Morgan Stanley (MS) upgraded the group to "neutral" from "underweight." Morgan also added JPMorgan Chase (JPM) and AIG (AIG) to the firm's recommended list of 40 U.S. stocks. The bank cited improved valuation and more limited risk.

Meanwhile, Anheuser-Busch (BUD) soared to an all-time record after it said Wednesday night it received a $46.3 billion unsolicited takeover bid from Belgian/Brazilian brewer InBev. If the companies were to merge, it would create the largest brewer in the world.

InBev, which makes Stella Artois and Beck's, is offering $65 per share for Anheuser. News of the bid sent the U.S. brewer's shares up nearly 5%. Budweiser said it will evaluate the proposal carefully. The Wall Street Journal reported late Thursday that Anheuser is in talks with Modelo, the Mexican brewer of Corona and Pacifico, over a possible combination to fend off the InBev offer. 

On the economic front, the Commerce Department said retail sales rose 1.2% in May -- the largest increase since November and significantly higher than expected. It's clear retailers benefited from the first batch of economic stimulus checks as some stores even provided 10% bonuses if consumers cashed them in on site.

Also, the government said weekly jobless claims rose by a larger-than-expected 25,000 last week to 384,000. Economists were expecting jobless claims to rise to 370,000. The report shows continued weakness in the nation's labor market, which has contracted in recent months but not fallen off the map.

Inflationary worries weren't eased by a report showing import prices rose 2.3% in May, primarily boosted by the cost of oil. Economists were expecting import prices to rise 2% last month.

Corporate Movers

Yahoo! (YHOO) said talks with Microsoft (MSFT) have concluded without a deal being reached over an all-out acquisition or a partial one. Shares of Yahoo! fell sharply on the news as the stock had been bid up on the hopes a deal would be reached for at least $33 per share. Late in the day Microsoft said it is still open to an alternate deal with Yahoo. Also, The Wall Street Journal reported that Google (GOOG) is close to finalizing a search advertising pact with Yahoo!. 

United Airlines (UAUA) became the second U.S. major airline to start charging passengers for their first checked bag. Struggling with $130 oil prices, United announced it will charge $15 for the first bag. The move comes three weeks after rival American Airlines (AMR) released a similar plan. The changes will take effect for passengers buying domestic tickets starting on Friday for flights after Aug. 18. United is also upping the fees for excess baggage, overweight luggage and special items.

Continental Airlines (CAL) detailed previously announced plans to slash capacity by 11% beginning in September. Continental said it will discontinue service between certain hubs, reduce frequencies in certain markets and cut 3,000 jobs.

Invitrogen (IVGN) agreed to a $6.4 billion cash and stock deal to acquire scientific instruments maker Applied Biosystems Group (ABI). The $38 per share deal represents a 17% premium from Applied Biosystems' closing price on Wednesday.

Thornburg Mortgage (TMA) swung to a huge $3.31 billion loss in the first quarter as the value of its "jumbo loans" have plunged amid the housing slump. Thornburg's $20.64 per share loss compares to a profit of 62 cents a year ago.

KeyCorp (KEY) lost nearly a quarter of its value after the Cleveland-based bank released plans to raise $1.5 billion in equity capital and halve its quarterly dividend. The capital raising comes after KeyCorp said a recent federal court ruling will force it to take up to $1.2 billion in second-quarter charges. KeyCorp is slashing its dividend to 18.75 cents from 37.5 cents to save $200 million annually.

Citigroup (C) released plans to close the hedge fund that CEO Vikram Pandit started two years ago, resulting in a $200 million writedown in the first quarter. The fund, called Old Lane, was acquired by Citi for $800 million last summer. Citi didn't say how many of the fund's 130 employees would stay with the bank.

Palm (PALM) soared 9% as the phone maker said its Palm Centro phone will be available on the Verizon Wireless network starting Friday. The relatively cheap smart phone has already had wide success as it's been available on Sprint (S) and AT&T (T), the nation's other two large wireless networks. Verizon Wireless is a joint venture between Verizon Communications (VZ) and Vodafone (VOD).

Archer Daniels Midland (ADM) took a big hit after BMO Capital Markets cut the stock to "market perform" from "outperform and Citi lowered its rating to "hold" from "buy." The firms cited higher corn prices, which have partially been caused by the flooding in the Midwest. BMO lowered its price target on ADM to $40 from $47.

World Markets

The Dow Jones Euro Stoxx 50 Index, a gauge of the 50 biggest companies in Europe, rose 33.20 points, or 0.95%, to 3542.59. The FTSE 100, London's benchmark index, gained 67.20 points, or 1.17%, to 5790.50.

On the continent, Paris's CAC 40 Index picked up 11.39 points, or 0.24%, to 4672.30 while Germany's DAX rose 64.26 points, or 0.97%, to 6714.52.

Tokyo's Nikkei 225 Index fell 294.88 points to 13888.60. Hong Kong's Hang Seng lost 303.74 points, or 1.3%, to 23023.86.