Wall Street closed mixed Thursday as Wal-Mart’s retail sales report prevented the Dow from making headway, but the S&P 500 and Nasdaq Composite returned to positive territory ahead of Friday's crucial jobs report. 

Today's Market

The Dow Jones Industrial Average lost 27.24 points, or 0.31%, to 8742.46, the S&P 500 added 3.08 points, or 0.34%, to 909.73 and the Nasdaq Composite picked up 17.95 points, or 1.12%, to 1617.01. The consumer-friendly FOX 50 gained 0.19 points, or 0.03%, to 687.64.

The markets fluctuated throughout the day as Wall Street reacted to a fresh batch of retail sales reports, as well as a somewhat positive labor report and President-elect Barack Obama's stimulus pitch. Thursday's mixed results come a day after the Dow tumbled 245 points, a selloff that wiped out all of 2009's modest gains. 

“Everyone is waiting for tomorrow’s [labor] numbers. Considering all of the negative news between yesterday and today, the market is acting pretty well. If this was four or five months ago, we would’ve been down 700 points, instead of 300," said Anthony Conroy, head trader at BNY ConvergEx. "It’s indicative of a market bottoming." 

Wal-Mart, the Dow's best performing stock in 2008, led the way down on the index. General Motors (GM) and JPMorgan Chase (JPM) also saw heavy selling. On the other hand, Microsoft (MSFT) and Alcoa (AA) were the best performing stocks on the Dow. 

The Nasdaq Composite managed to end green, led by gains for tech heavyweights like Apple (AAPL) and Electronic Arts (ERTS). Those gains helped offset steep losses for Sun Microsystems (JAVA), which was added to Goldman Sachs's Americas sell list.

The markets didn't get a boost from Obama's economic speech, in which he warned lawmakers of drastic economic consequences if Congress doesn't sign off on a massive stimulus package that will only add to the government's huge budget deficit.

"I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible. If nothing is done, this recession could linger for years. The unemployment rate could reach double digits," Obama said. "In short, a bad situation could become dramatically worse."

More Red From Retailers

As expected, retailers' same-store sales reports released Thursday morning were extremely weak due to the ongoing economic turmoil. However, 11 of the 22 retailers reporting beat Wall Street's very low expectations, while 10 missed and one matched, according to Thomson Reuters. 

In a sign that even discount retailers are struggling during this year-long recession, Wal-Mart cut its fourth-quarter guidance and revealed its same-store sales rose 1.7% excluding fuel, widely missing estimates.

The numbers were much worse for most mainstream retailers as Limited Brands (LTD) posted a 10% drop in same-store sales and lowered its guidance for the current quarter below estimates and retailer J Crew (JCG) said same-store sales declined in the mid-teen range and slashed its outlook. Also, Macy's (M) said its same-store sales slumped 7.5%, forcing the company to also cut its guidance and unveil plans to close 11 stores. 

However, there were some bright stops as Sears (SHLD) sent its shares soaring by forecasting fourth-quarter earnings well above analyst expectations and Aeropostale (ARO) boosted its fourth-quarter guidance.

Labor Data in Focus

Just a day before the government's all-important monthly employment report, the Labor Department said initial jobless claims unexpectedly declined for the second consecutive time last week to the lowest level in almost three months. The government said claims fell 24,000 to 467,000 last week, widely beating expectations for claims to surge by 63,000. 

"It would be a mistake to view the drop in initial claims filings as a sign of an improving labor market as it was likely affected more by the calendar than the calculator," said Mark Lieberman, FOX Business senior economist, pointing to a second consecutive holiday-shortened week. 

Continuing claims, those filed by workers out of work for more than one week, soared by 101,000 to 4.61 million, a level unseen since November 1982. The latest labor figures come after ADP predicted on Wednesday the U.S. lost nearly 700,000 private-sector jobs in December.

Economists warned Friday's report could be just as ugly as consensus estimates say the U.S. lost 500,000 jobs last month, bringing the unemployment rate to 7%. 

Meanwhile, crude oil futures built on Wednesday's historic selloff, the worst one-day percentage drop for the commodity since September 2001. The price of a barrel of crude ended in the red for the third consecutive day, settling at $41.70, down 93 cents on the day. The energy market was still reeling from a massive and unexpected surge in crude stockpiles announced a day ago. 

Corporate Movers

Citigroup (C) agreed to a deal with Senate Democrats that will allow judges to set new repayment terms for millions of mortgage holders in bankruptcy court, The Wall Street Journal reported. Citi and other lenders had previously fought to defeat similar legislation that called for "cramdowns,” which aim to prevent foreclosures.

Bank of America (BAC) is set to lose former Merrill Lynch President Gregory Fleming, who will become the second major departure from the newly-merged bank this week, the Journal reported. 

Yahoo! (YHOO) saw its shares rise even after Microsoft (MSFT) CEO Steve Ballmer told FOX Business the failed takeover of Yahoo! is "a thing of the past," casting doubt on hopes the two tech giants would renew merger talks. "You certainly shouldn't think we'll go back after Yahoo...We may try to do other kinds of partnerships with them, but acquisition is a thing of the past," said Ballmer. 

Microsoft (MSFT) dealt a blow to rival Google (GOOG) by unveiling a deal to provide Internet search services for cell phones of Verizon Wireless, which is a joint venture of Verizon (VZ) and Vodafone (VOD). 

TD Ameritrade (AMTD) unveiled a $606 million stock and cash deal to expand its online brokerage by acquiring thinkorswim (SWIM). The deal represents a 54.1% premium on thinkorswim's closing price on Wednesday. 

Target (TGT) said same-store sales fell 4.1% in December, widely beating expectations for a 9.1% drop. 

Nordstrom (JWN) warned it won't meet its prior fourth-quarter forecast and said its same-store sales fell by a better-than-expected 10.6% in December. 

J.C. Penney (JCP) disclosed same-store sales declined by 8.1% last month, topping estimates for sales to fall 10.3%. 

Saks (SKS) showed even luxury retailers have been hurt by the recession as it said same-store sales plunged by a worse-than-expected 19.8% in December. 

Walgreen (WAG) released plans to slash 1,000 jobs and offer early retirement and severance to some workers, resulting in costs of up to $400 million over the next two fiscal years. 

Global Markets

The ripple effects of Wednesday's selloff translated to a nasty fall in Asian markets and a second consecutive losing session in Europe. 

In London, where the Bank of England slashed rates to the lowest level in the central bank's 400-year history, the FTSE 100 lost just 0.05% to 4505.37. On the other hand, Germany's DAX fell 1.17% to 4879.91.

"Some are seeing this as the end of the bear market rally and with a lot of negative data flying around ... It's no real surprise that we've seen this selloff," said Jimmy Yates, a dealer with CMC Markets in London.     

Asia saw heavier losses as Tokyo's Nikkei 225 slumped nearly 4% to 8876.42 and Hong Kong's Hang Seng extended slid 3.8% to 14415.91. Australia's ASX 200 dropped 2.26%.