Investors cautiously returned to Wall Street Thursday, lured by beaten down financial and retail stocks.
The buying was subdued after a worse-than-expected weekly unemployment report added to investors' growing concerns that the economic recovery might not come as quickly as hoped. Stocks are down sharply this week as investors worry that the optimism that fed the market's spring rally might have been premature.
The Dow Jones industrial average rose about 60 points, but lagged gains by the Standard & Poor's 500 index and Nasdaq composite index. Financial stocks rose after falling earlier in the week and lifted the KBW Bank Index, which tracks 24 of the nation's largest banks, 3.5 percent.
Retailer Urban Outfitters Inc. rose after reporting earnings that beat forecasts. But Wal-Mart Stores Inc. slipped after its first-quarter results failed to excite the market.
Technology shares gained after software maker CA Inc. said Wednesday that its fiscal fourth-quarter earnings rose as cost-cutting stayed ahead of a drop in revenue.
The advance came as the market grappled with another reminder of the strained job market. The Labor Department's weekly data showed more workers filing for unemployment benefits. New claims jumped to 637,000, above what economists had forecast.
The overall number of people seeking unemployment benefits grew faster than expected, rising to 6.6 million, while continuing claims hit a 15th straight weekly record.
Analysts had expected some rebound after stocks tumbled Wednesday, sending the S&P 500 index down 2.7 percent. The market was shaken by a Commerce Department report that retail sales fell unexpectedly in April for the second straight month, and by a separate report that showed home foreclosures rising.
The twin hits to two key areas of the economy _ consumer spending and the housing market _ have led investors to drop stocks this week and seek the shelter of bonds. That put on hold a rally that has sent the Dow Jones industrial average spiking 31 percent off of 12-year lows reached in early March.
"Expectations got overblown and the harsh unfortunate reality is that unemployment continues to climb and that consumers remain under pressure," said Stuart Schweitzer, global markets strategist at J.P. Morgan's Private Bank.
In early afternoon trading, the Dow rose 60.69, or 0.7 percent, to 8,345.58. The S&P 500 index rose 10.74, or 1.3 percent, to 894.66, while the Nasdaq rose 30.06, or 1.8 percent, to 1,694.25.
About three stocks rose for every one that fell on the New York Stock Exchange, where volume came to 712.9 million shares.
Regional banks Fifth Third Bancorp and Huntington Bancshares Inc. showed some of the strongest gains. Fifth Third rose 48 cents, or 6.8 percent, to $7.50. Huntington rose 28 cents, or 6.4 percent, to $4.69.
Urban Outfitters advanced 68 cents, or 3.6 percent, to $19.51 after posting better-than-expected quarterly results. Kohl's Corp. fell 24 cents to $41.71 after its report.
Wal-Mart fell $1.06, or 2.1 percent, to $48.97 after reporting first-quarter results that met analysts' expectations. Wal-Mart had been performing better than most retailers during the recession.
Among other retailers, Macy's Inc. rose 8 cents to $11.60, while Best Buy Co. climbed $1.30, or 3.7 percent, to $36.50.
CA, which makes software to run information technology systems, rose $1.17, or 6.8 percent, to $18.49.
Michael Strauss, chief economist and market strategist at Commonfund, said some traders had been expecting an increase in weekly unemployment claims because of expected shutdowns among the nation's automakers.
Ford Motor Co. rose 29 cents, or 5.9 percent, to $5.25 after its chief executive, Alan Mulally, said at the company's annual meeting that the automaker is continuing to slash costs and boosting development of safe, fuel-efficient vehicles. Shareholders approved the company's request to issue stock to help pay some of its health care obligations to retired autoworkers.
In other trading, the Russell 2000 index of smaller companies rose 11.66, or 2.5 percent, to 483.48.
Bond prices were mixed after rising a day earlier. The yield on the 10-year Treasury note, a widely used benchmark for loans including home mortgages, slipped to 3.10 percent from 3.12 percent late Wednesday.
The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude rose 37 cents to $58.39 per barrel on the New York Mercantile Exchange.
Overseas, Britain's FTSE 100 rose 0.7 percent, Germany's DAX index advanced 0.2 percent, and France's CAC-40 rose 0.1 percent. Japan's Nikkei stock average fell 2.6 percent.
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