Not even the biggest one-day dollar gain for crude oil could take the wind out of Wall Street's sails on Thursday.

Wall Street rebounded in a big way, soaring 200 points on the Dow as traders cheered a series of stronger-than-expected retail sales reports as well as some much-needed M&A news. 

Today’s Market

The Dow Jones Industrial Average rose 213.97 points, or 1.73% to 12604.45, the Standard & Poor’s 500 index gained 26.85 points, or 1.95%, to 1404.05 and the Nasdaq Composite Index picked up 46.80 points, or 1.87%, to 2549.94. The consumer-friendly Fox 50 rose 19.17 points, or 1.98%, to 986.45.

The market was certainly due for a bounce back after four straight losing sessions on the Dow, the worst stretch for the index since the end of March. In fact, the Dow started the day off at its lowest level since mid-April and down 6.6% year-to-date.

Wall Street's rally was most notable for withstanding two negative news stories that would have often caused a selloff: Bond insurers MBIA (MBI) and Ambac Financial (ABK) saw their "AAA" credit ratings slashed by Standard & Poor's and crude soared more than $5 on the weaker U.S. dollar.

Verizon (VZ) rose more than 5% to lead the Dow after it announced a $28.1 billion deal to acquire Alltell and become the No. 1. U.S. wireless carrier. Also, Chevron (CVX) jumped more than 4% due to the record day for oil. 

On the downside, drug maker Pfizer (PFE) slid to its lowest level in a decade after it was downgraded to "neutral" from "buy" by Goldman Sachs (GS). 

Three key headlines had Wall Street in full rally mode on Thursday: Consumers spent money at retailers in May, the government unexpectedly said weekly jobless claims fell last week and wheeling and dealing returned in the form of the telecom deal. 

Retailers provided strength for the stock market by posting mostly better-than-expected May same-store sales results despite the slumping economy and pessimistic U.S. consumer. The king of the retailers, Wal-Mart (WMT), said its May same-store sales jumped 3.9%, much better than the 1.6% rise the market had expected. Shares of Wal-Mart rose to a four-year high on the results. 

BJ's Wholesale (BJ), Hot Topic (HOTT), Family Dollar (FDO) and Costco (COST) were among the other winning retailers in May, all beating the Street's sales estimates.

On the downside, discount retailer Target (TGT) disappointed shareholders with a 0.7% fall in sales in May. Also, Gap (GPS) revealed a 14% plunge, and Dillard's (DDS) said sales were off by 7%. 

Wall Street benefited from the merger and acquisition news. Verizon Wireless, which is a joint venture of Verizon Communications and Vodafone (VOD), announced it has bought Alltell in a deal worth $28.1 billion. 

The deal comes just seven months after Alltell was taken private in a leveraged buyout worth $27.5 billion by TPG Capital and Goldman Sachs Group (GS). Verizon Communications jumped more than 5% on the news even though it traded lower after initial reports of a merger broke on Wednesday.

Meanwhile, the government reported an unexpected 18,000 claim decline in weekly jobless claims for last week. Economists had expected that claims would rise by 3,000. Continuing claims, which are unemployment benefits that extend for more than four weeks, rose to a four-year high of 3.086 million people.

The positive labor data follows a better-than-expected ADP report on Wednesday, which showed the private sector surprisingly added 40,000 jobs in May. It also comes a day before the all-important May jobs report from the government. The report will likely set the tone for Wall Street for several days afterwards as it gives traders the clearest picture on the economic situation. 

Just like the stock market, crude oil prices rebounded strongly on Thursday thanks to a tumble for the U.S. dollar. Crude settled $5.49 higher at $127.92 a barrel after losing 4% of its value over the prior two trading days. It was the largest one-day rise in terms of dollars that crude has ever posted. However, on a percentage basis crude has risen by a larger amount in the past.

Ratings company Standard & Poor's slashed its credit ratings on bond insurers MBIA (MBI) and Ambac Financial (ABK) a day after Moody's put the companies on credit watch negative. S&P removed the companies' coveted "AAA" credit ratings, on "diminished" business opportunities and "declining financial flexibility." Shares of both companies fell sharply on the news but then recovered to finish significantly higher on the day.

Corporate Movers

Continental Airlines (CAL) rose after it released plans to slash 3,000 jobs, cut capacity by 11% and retire 67 planes by the end of next year. The airliner also said its two top execs will go without pay for the rest of 2008. The changes follow similar moves that were made in recent days by United Airlines (UAUA) and American Airlines (AMR) and as the industry grapples with record fuel costs. 

Moody’s (MCO) reached a deal with New York Attorney General Andrew Cuomo aimed at increasing independence for ratings companies that rate mortgage-related securities. Cuomo also said he signed off on a deal with rivals McGraw-Hill’s (MHP) Standard & Poor’s unit and Fimalac SA’s Fitch Ratings. The agreement changes the way these companies are paid by banks for providing ratings. 

Lehman Brothers (LEH) is open to an investment from large U.S. institutional investors in addition to foreign capital, The Wall Street Journal reported. The investment bank told at least one U.S. pension fund it would open its books so the fund could consider an investment, the newspaper reported. Lehman’s stock plunged earlier this week on liquidity fears but bounced back over the last two days after Merrill Lynch (MER) upgraded the stock and it reassured shareholders about its liquidity situation.

France Telecom (FTE) revealed it has offered to acquire TeliaSonera for $42 billion in an effort to create the world's fourth-largest telecom. However, TeliaSonera, a Swedish telecom, rebuffed the bid, saying the offer price was too low. 

Time Warner (TWX) and General Electric’s (GE) NBC Universal are the top bidders for the Weather Channel, The Atlanta Journal-Constitution reported on Thursday. Privately-held Landmark Communications has been looking for a suitor for the Weather Channel since last year. The newspaper reported that it’s unclear when Landmark will reveal the winner of the bidding, which could reach $5 billion.

Bear Stearns Merchant Banking, the private-equity branch of the now-defunct Bear Stearns, is expected to release plans to be spun off as an independent company, The Wall Street Journal reported. BSMB, which manages about $5 billion and is considered a middle-market private-equity firm, will have JPMorgan Chase (JPM) as a major investor the newspaper reported.

News. Corp’s (NWS) HarperCollins replaced CEO Jane Friedman with Brian Murray, who previously served as president. Friedman stepped down after 10 years at the publisher and becomes the second publishing chief to leave in recent weeks.

World Markets

Both the Bank of England and the European Central Bank left their respective interest rates unchanged on Thursday as European central bankers deal with higher-than-normal inflation. 

Jean-Claude Trichet, president of the European Central Bank, said in a news conference that inflation risks remain stubbornly high and signaled that the bank will not be cutting interest rates any time soon. Trichet also said he is "not excluding" the possibility that interest rates could go up "a small amount" at next meeting.

In the equity markets, The Dow Jones Euro Stoxx 50 Index, a gauge of the 50 biggest companies in Europe, fell 16.22 points, or 0.44%, to 3682.83. The FTSE 100, London's benchmark index, rose 25.20 points, or 0.42%, to 5995.30.

On the continent, Paris's CAC 40 Index dropped 8.01 points, or 0.16%, to 4907.06 while Germany's DAX slid 23.60 points, or 0.34%, to 6941.83.

In Asia, Tokyo's Nikkei 225 Index fell 94.45 points to 14341.12. Hong Kong's Hang Seng Index gained 132.04 points to 24255.29.