Stocks closed out a volatile session on Wall Street in positive territory Thursday after a brief drop that pushed the S&P 500 below 1,600, amid caution ahead of the government's monthly jobs report and as the U.S. dollar tumbled against the Japanese yen.
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"They yen is triggering everything," said Art Cashin, director of floor operations at UBS Financial Services. "They're worried about liquidations of carry-trade positions. It spills over into all the markets. And all the markets are a lot thinner than normal because a lot of people are standing aside because of tomorrow's [jobs] number."
Stocks briefly tumbled to session lows in midday trading as the greenback fell below 98 yen for the first time in over a month, before rebounding near session highs in the final hour of trading.
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The Dow Jones Industrial Average added 80.03 points, to close at 15,040.62, avoiding a three-day losing streak. Verizon and Home Depot led the blue-chip gainers.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, ended near 17.
Defensive sectors led the late-day rally, with telecoms and health care among the best performers. Techs finished slightly lower.
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On the economic front, jobless claims dropped 11,000 to a seasonally adjusted 346,000, according to the Labor Department. Economists expected a reading of 345,000. Earlier, executive recruitment firm Challenger, Grey & Christmas' said corporate job cuts declined again in May.
Investors will be paying close attention to Friday's government jobs report. Employers are forecast to have added 170,000 jobs to their payrolls last month, slightly up from April's 165,000 count, according to a Reuters survey. The unemployment rate is seen holding at an almost 4-1/2 year low of 7.5 percent.
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Employment is a key indicator for the Fed, and Chairman Ben Bernanke has indicated the central bank could start tapering off its $85 billion bond purchases if the jobs market shows consistent improvement.
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European shares finished near session lows after ECB chief Mario Draghi said the central bank is "technically ready" to lower the bank's deposit rate into negative territory for the first time, which would mean the ECB would charge commercial banks for holding their money overnight.
"That's an indication that Draghi feels that the problem of lending is going to continue to dampen the outlook for a comeback anytime soon," said Peter Cardillo, chiefmarket economist at Rockwell Global Capital. "The risk in the euro zone remains to the downside."
The ECB left its main interest rate unchanged at a record low 0.50 percent and said the euro zone is on track for a "very gradual recovery" later this year driven by the central bank's loose monetary policy and demand from abroad.
"The Governing Council continues to see downside risks surrounding the economic outlook for the euro area," Draghi added. "They include the possibility of weaker-than-expected domestic and global demand and slow or insufficient implementation of structural reforms in euro area countries."
Among earnings, VeriFone Systems plunged after the electronic-payment systems maker handed in an earnings and revenue outlook for the current quarter that missed Wall Street projections.
JM Smucker posted earnings that easily topped expectations, while revenue was in line with estimates.
—By CNBC's JeeYeon Park. Follow JeeYeon on Twitter: @JeeYeonParkCNBC
What's Happening This Week:
THURSDAY: Fed balance sheet/money supply; Earnings from Cooper Cos., Vail Resorts
FRIDAY: Employment situation, consumer credit
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