Stocks closed slightly higher after giving back big gains from an early session surge.
The Dow Jones Industrial Average closed in positive territory after a choppy day. The Nasdaq edged higher, while the S&P 500 was slightly up.
On the New York Stock Exchange, advancers led decliners 1,739 to 1,574 with 133 stocks unchanged. On Nasdaq, decliners led advancers 1,510 to 1,479 with 138 stocks unchanged.
Traders said the market stalled in mid-day trading. A strong IPO market in December may have drawn money away from established stocks.
The Dow Jones Industrial Average rose to an intra-day high of 12,368.61 after the opening, but investors pocketed profits. The major indexes surged on a stronger-than-expected retail sales report and speculation about mergers in the airline industry. Wal-Mart, the world's largest retailer, was up slightly. Federated Department Stores and J.C. Penney also posted small gains, but Best Buy fell on an analyst's downgrade.
The mid-day rally plunged into the red after a jump in oil inventories sparked speculation that higher oil prices might dampen consumer spending and spur inflation. ExxonMobil rose.
Before the opening bell on Thursday, Bear Stearns and Lehman Brothers are scheduled to report fourth-quarter earnings. Analysts expect Bear Stearns to earn $3.36 a share, compared with $2.90 a year ago. Lehman is expected to earn $1.68 a share compared with $1.38 a year ago.
Discount retailer Costco is expected to earn 50 cents a share in the first quarter of fiscal year 2007 vs. 45 cents a year ago.
OPEC ministers are scheduled to meet in Nigeria Thursday to discuss production levels. Previously, the oil cartel ordered production cuts in an effort to keep prices high, but analysts don’t look for additional cuts.
The Labor Department is scheduled to release initial jobless claims at 8:30 a.m. Analysts look for a drop to 320,000 from 324,000 the week before.
Also on Thursday, the Import Price Index is expected to show that import prices fell 0.2% in November after a 2% drop in October.
Airlines Move Higher
Shares of airlines are getting a boost on reports of possible consolidation within the industry. UAL , the parent of United Airlines, and Continental are reportedly engaged in exploratory merger talks. The deal isn't certain, and numerous issues would have to be addressed including how a combination would be structured and who would run the combined company, according to published reports.
AirTran Holdings is also making another bid for Midwest Air Group for $290 million. AirTran, a discount carrier that operates primarily in Orlando and Atlanta, has tried previously to take over Midwest, but it was rejected earlier this month. Midwest is another smaller carrier with hubs in Milwaukee and Kansas City, Missouri.
AirTran's management is going public with its bid, claiming the acquisition is worth another try.
"This is a great deal for investors with a 37% premium," AirTran Holdings CEO Joe Leonard said on CNBC's "Squawk Box." "This is a great deal for Midwest employees with growth opportunities we can provide that they can't do on their own and the communities that they serve will get significantly more flights."
Leonard says the deal could save $60 million a year in both cost and revenue synergies.
General Electric raised its quarterly dividend on Tuesday to 28 cents per share from 25 cents, however the company estimated 2007 profits will fall short of Wall Street expectations. GE forecasted profits next year of $2.17 to $2.23 per share. GE is the parent company of CNBC.
Europe Rises Following U.S. Economic Data
Lower than expected oil inventories in the U.S. helped to send European oil shares higher.
London's FTSE-100 , Frankfurt's DAX and the Paris CAC-40 rose on the stronger-than-expected retail data and closed in positive territory after the weekly oil inventory report in the U.S. The FTSE CNBCGlobal 300 was also higher.
Australian Shares Just Miss Record
Australian shares closed near a record peak, helped by CSL's upbeat profit outlook, but QantasAirways fell after spurning a takeover bid from a Macquarie Bank led consortium.
The Nikkei 225 Average closed higher after being in negative territory most of Wednesday. South Korea's Kospi Index also ended higher.