Slammed by a $5 rise in crude oil, the stock market managed to close mixed and avoid a selloff on Thursday, thanks largely to a rally in energy stocks. 

Today's Market

The Dow Jones Industrial Average rose 12.78 points, or 0.11% to 11430.21, the Standard & Poor’s 500 index gained 3.18 points, or 0.25%, to 1277.72 and the Nasdaq Composite lost 8.70 points, or 0.36%, to 2380.38. The FOX 50 added 1.83 points, or 0.20%, to 912.57.

The day marks the second straight session of gains for the blue chips, which climbed out of an early decline of nearly 100 points. It's also the fourth day out of the past five that the Nasdaq Composite failed to advance. 

While much of the focus was on the financials and the jumping price of crude oil, the stock market was also influenced by a trio of mixed economic reports and a fresh batch of earnings from mid-level companies like Burger King (BKC) and Barnes & Noble (BKS). 

Energy giants Chevron (CVX) and ExxonMobil (XOM) were two of the biggest winners on the Dow Thursday, rising 2% each along with the price of oil. On the other hand, insurer AIG (AIG) took a 5% dive and General Motors (GM) closed sharply lower.

The Nasdaq Composite ended the day with slight losses even as Internet conglomerate IAC/Interactive (IACI) jumped 8% on its newly completed spin-off. Leap Wireless (LEAP) and BlackBerry maker Research in Motion (RIMM) also closed sharply higher. Hansen Natural's (HANS) and Nvidia (NVDA) were two of the biggest losers on the Nasdaq 100 on the day. 

In stark contrast to the steep decent in oil prices since the start of July, crude has soared nearly $10 over the past three trading days. In a broad commodities rally, crude closed $5.62 higher on Thursday, rising to $121.18 a barrel -- the highest level in more than two weeks. 

Analysts were split on the reasons behind the huge jump in oil, which put heavy pressure on airline stocks like U.S. Airways (LCC) and United Airlines (UAUA). The energy market was buzzing about growing tensions between the U.S. and Russia, which has sparked fears of another Cold War. However, others were skeptical that geopolitical concerns was the culprit for this oil surge as the tensions had been ignored by the market over the past week or so. 

Oil's rise was likely tied to an ugly day for the dollar, which slid about 1% against the euro. The weakness in the greenback also helped boost other dollar-traded commodities like gold, which rose by $22.60 to $833.40 an ounce. 

No matter the cause for the oil jump, it's clear energy stocks were the biggest benefactors, closing more than 2% higher on the day with names like Hess (HES) and Schlumberger (SLB) rising sharply. 

The energy stocks helped offset another down day for financial stocks, which have been a major headache for the market through much of the year as the credit crisis and housing slump continue. 

The declines came despite a less negative day for Fannie Mae (FNM) and Freddie Mac (FRE), the mortgage giants that own or back $5 trillion of U.S. mortgages. Fannie Mae managed to close the day significantly higher, erasing earlier steep losses.  The Wall Street Journal reported that both companies need to be able to refinance $225 billion worth of short-term debt and other securities by the end of September to avoid the government from taking action. 

Investment bank Lehman Brothers (LEH) pared its losses after influential analyst Dick Bove of Ladenburg Thalmann upgraded the stock to "buy," saying a hostile takeover is now a possibility. He also raised his price target to $23 from $20. "Investors are unwilling to accept any positive view of the company; management is unwilling to sell out at a deeply distressed value. The stage is set for a hostile bid to takeover the whole company," said Bove.

Meanwhile, the stock market had a muted response to a mostly in-line economic report from the Labor Department, which showed weekly jobless claims fell by 13,000 to 432,000 claims last week. Economists had been expecting a decline of 12,000 and the report marks the second straight weekly drop from six-year highs.

The government also said continuing jobless claims, which are for those on unemployment benefits for more than four weeks, fell by 17,000 to 3.36 million. The four-week moving average of initial claims rose last week to 445,750, which is the highest level in almost seven years.

Corporate Movers

Merrill Lynch (MER) reached a settlement with the Massachusetts Attorney General by agreeing to buy back auction-rate securities it sold to investors. The financial giant will buy back all illiquid securities from investors with less than $3 million on deposit starting October 15. Merrill will join a long line of Wall Street banks that have agreed to refund investors after regulators probed the way the companies marketed the securities after the markets froze earlier this year. 

Lehman Brothers (LEH) was the subject of rumors earlier this summer that the Federal Reserve sought to quash, according to The Wall Street Journal. The central bank discovered that a rumor that Credit Suisse (CS) planned to pull its line of credit to Lehman was false, according to the newspaper. The story highlights the level of uncertainty in the sector and the efforts by the government not to have a repeat of Bear Stearns, the investment bank that was forced to sell itself to JPMorgan Chase (JPM) after suffering a crisis of confidence. 

General Motors (GM) unveiled the plans behind a $500 million investment to build the Chevrolet Cruze, a new compact car, in its Lordstown, Ohio factory. Also, GM revealed that it hasn't had any talks with suitors for its Hummer brand, contrary to previous published reports. 

Barnes & Noble (BKS) posted a better-than-expected adjusted-profit in the second quarter of 15 cents per share, topping estimates of 9 cents. The bookseller’s revenue fell 1.6% to $1.2 billion, matching analyst estimates. Barnes & Noble reiterated its 2008 earnings view of $1.70 to $1.90 per share, compared to mean analyst forecasts of $1.75 per share. However, the company lowered its 2008 same-store sales to a decrease in the low single digits.

Microsoft (MSFT) signed Jerry Seinfeld to appear in commercials as a part of the software giant’s ongoing ad battle with tech rival Apple (AAPL), The Wall Street Journal reported. Microsoft has hired a new ad agency for its $300 million advertising campaign, which will pay Seinfeld about $10 million to appear in commercials with founder Bill Gates. 

H.J. Heinz (HNZ), the ketchup maker, posted a profit of $229 million, or 72 cents a share, compared with $205.3 million, or 63 cents a share, from a year ago. Analysts were expecting earnings of 66 cents. Heinz said sales jumped 14.7% to $2.58 billion in the period. 

Burger King Holdings (BKC) posted a fiscal fourth-quarter profit of 37 cents a share, exceeding analyst estimates by three cents. The world's second-largest hamburger chain saw its revenue jump 9% to $646 million. Burger King also released a fiscal 2009 earnings forecast that topped Wall Street's expectations.

InterActive Corp (IACI) has completed its complicated spin off of four divisions: ticket seller Ticketmaster (TKTM), home shopping company HSN Inc.(HSNI), travel company Interval Leisure Group (IILG) and real estate division Tree.com. (TREE). IAC held onto more than 35 Internet companies, including Ask.com, Match.com, Evite. 

Kohl's (KSS) announced a change at the top as Chairman Larry Montgomery resigned as CEO, paving the way for Kevin Mansell, who has been the retailer's president since 1999. Montgomery will stay on as the company's chairman. 

Longs Drug Stores (LDG) saw its shares rise to 52-week highs after the New York Post reported Advisory Research, the company's largest shareholder, will ask regulators to help thwart CVS Caremark's (CVS) $2.9 billion buyout bid. Advisory Research is reportedly willing to go to the SEC and to court to receive undisclosed information needed to assess the transaction that Longs already told shareholders to accept, the Post reported. Advisory Research told the paper it believes Longs is worth more than the $71.50-a-share offer currently on the table. 

Data Dump 

The Philadelphia Fed survey, a regional manufacturing gauge, improved to -12.7 in August from -16.3. The report was in-line with the -12.8 reading that economists had expected. 

Also, a private research group's leading indicators index declined by 0.7% in July to 101.2, signaling more economic trouble. Economists surveyed by Dow Jones had been expecting a more modest 0.3% decline from the Conference Board's report.