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The blue chips made a stunning rebound, ending solidly higher after slumping more than 90 points at session lows, after numerous embattled commodities pared early losses.
The Dow Jones Industrial Average climbed 65.9 points, or 0.52%, to 12,696, the S&P 500 was up 6.6 points, or 0.49%, to 1,349 and the Nasdaq Composite gained 18 points, or 0.63%, to 2,863. The FOX 50 was up 4.7 points to 946.
Market participants had a flood of information to interpret Thursday afternoon. In addition to the velocious price action in commodities, three important economic reports were released earlier in the day.
"Volatility is seriously high" in the commodities market, wrote Olivier Jakob, managing Director of Petromatrix, in a note.
There are several reasons analysts suggest for the sudden selloff. Concerns that high prices have cut into global demand, recent gains in the U.S. dollar, and the nearing end of the Federal Reserve's aggressive long-term treasury buying program, QE2, all weigh in.
The U.S. dollar recently lost 0.07% against a basket of world currencies and the euro was up 0.25% against the greenback.
Commodities were mixed on Thursday.
Light, sweet crude traded higher by 76 cents, or 0.77%, to $98.97 a barrel. Wholesale RBOB Gasoline futures, fell 6 cents, or 1.9%, to $3.06 a gallon.
Gold gained $5.40, or 0.3%, to $1,507 a troy ounce. Silver fell 72 cents, or 2%, to $34.79 a troy ounce.
The weekly jobless claims report has been highly-watched in recent weeks as initial claims for unemployment benefits have suddenly spiked well above the 400,000 mark. Claims fell to 434,000 from 478,000 the prior week, still higher than estimates of 430,000.
Recent readings have been marred with a a myriad of so-called temporary factors that may be distorting the actual economic implications of the claims, economists say.
"As jobless claims are a time-tested barometer of the health of the labor market, the recent increase – and whether or not it persists – could be an important signal of overall economic activity," wrote economists at Goldman Sachs in a research note.
Producer prices jumped 0.8% in April, and 0.3% excluding food and energy prices. Those gains are higher than the 0.6% and 0.3% Wall Street expected, respectively.
Inflation has taken the spotlight recently as economists worry high commodity prices might seep into the broader price level, potentially crimping the worldwide economic recovery.
Retail sales were higher by 0.5% in April, slightly weaker than the 0.6% economists were expecting. Excluding autos, sales climbed 0.6%, which was inline with estimates.
"The improving job market and increased household income are helping consumers swallow rising gasoline and food prices," wrote Chris Christopher, senior principal economist at IHS Global Insight, in a research note.
Many banking stocks such as Bank of America (NYSE:BAC) and Citigroup (NYSE:C) were weaker after Federal Deposit Insurance Corporate Chairman Sheila Bair suggested regulation that would increase capital requirements, a move that would likely hurt profitability in the banking sector.
The increasingly unstable situation for Greece's sovereign debt has also rattled the markets.
"As a result of weak growth and sizeable fiscal slippages, Greece has reachedthe point where, under realistic scenarios, debt dynamics are unsustainable," economists at Barclays Capital wrote in a research note "The countdown to restructuring has started."
A restructuring of Greece's debt could send shockwaves through the European Union and even abroad, analysts say.
Goldman Sachs (NYSE:GS) shares slumped on high volume after well-known banking analyst Richard Bove of Rochdale Securities slashed the investment bank's rating to a "sell" and cut its price target to $120 from $163.
The English FTSE 100 was down 0.52% to 5,945, the French CAC 40 was off 0.86% to 4,023 and the German DAX slid 0.68% to 7,444.
In Asia, the Japanese Nikkei 225 shed 1.5% to 9,717 and the Chinese Hang Seng dipped 0.94% to 23,074.