Stocks closed higher as investors were encouraged by solid economic data amid a broad rally in technology stocks.
"We were pretty oversold yesterday," said Tom Schrader, managing director of US listed trading at Stifel Nicolaus. "We had some good news from the tech sector which propelled the Nasdaq higher."
The Dow Jones Industrial Average rebounded from a 146-point swoon in yesterday's session and closed with a gain of 56 points, or 0.4%. Similar gains were seen for the Nasdaq Composite and S&P 500, which is now less than 10 points off its all-time record close of 10 points.
The market's rebound Thursday, traders said, was also due in part to JP Morgan's agreement to unwind its position in two troubled debt securities funds operated by Bear Stearns.
"Today they were able to hedge that bet and ease some fears of a potential Long Term Capital situation," Schrader said, referring to the 1998 collapse of the $4.7 billion hedge fund.
"Every time a new headline came out about Bear or JP Morgan or Merrill Lynch, it helped the market," he added.
The markets were also lifted by positive economic data as the Philadelphia Federal Reserve said regional manufacturing activity increased more than expected in June. The business index came in at 18.0, well above the economists' consensus forecast of 7.0.
Energy was the best performing sector throughout the session, although the sector is now off of earlier highs as oil prices eased. Exxon Mobil was the biggest percentage gainer on the Dow, closing up 1.8%, and was followed closely by Intel, which rose 1.5%.
Shares of chipmakers moved higher across the board after shares of Advanced Micro Devices were upgraded by an analyst.
Yields on the 10-year Treasury moved up to 5.16% from
"I think conjecture about what interest rates will be and what rates actually do is going to cause further volatility in the market, but I still think the underlying bias will remain positive," said Eugene Peroni, senior vice president of equity research at Advisors Asset Management.
In other economic news, weekly jobless claims rose by 10,000 to 324,000 last week, the highest level in nearly two months. Analysts were expecting the number of workers filing first-time applications for unemployment insurance to be basically the same as the week before.
New York light sweet crude futures closed lower, easing off earlier highs. Crude futures breached the $69 a barrel level in intraday trading following news of a general labor strike in Nigeria, Africa's largest oil producer.
In corporate news, Blackstone's debut on the New York Stock Exchange will mark the first private equity company to offer shares to the public. The initial public offering is heavily subscribed and is expected to raise between $3.87 billion and $4.14 billion. Blackstone rival KKR is also looking to go public, according to CNBC's Charlie Gasparino.
Meanwhile, shares of Pier 1 came under pressure as the home-decor retailer posted a doubling of its first-quarter loss, on slowing sales and thinning merchandise margins.
H&R Block swung to a fourth-quarter loss Thursday as the continuing struggles of its mortgage lending arm offset higher revenue in its tax and financial services divisions. H&R Block reported losing 26 cents per share, during the February-April period, which is when the nation's largest tax preparer sees the majority of its revenue. Analysts surveyed by Thomson Financial expected earnings of $1.88 on $2.44 billion in revenue.
European Shares Close Lower
European shares were dragged lower Thursday, as weakness in the U.S. subprime mortgage market and higher bond yields continued to spook investors.
The London FTSE-100, Paris CAC-40 and Frankfurt DAX all finished lower.
European investors were concerned about the U.S. sub-prime mortgage sector after several Wall Street banks unwound positions in two Bear Stearns hedge funds heavily invested in the riskiest U.S. home loans.
In M&A news, shares in the London Stock Exchange declined as the U.K. bourse considered a tie-up with its Italian counterpartBorsa Italiana Wednesday.
The LSE rebuffed a takeover attempt from the U.S. Nasdaq exchange and was also linked with tie-ups with the New York Stock Exchange and Euronext, which later merged.
And U.S. sunglasses maker Oakley was snapped up by the world's biggest eyewear maker, Luxottica Group, in an all-cash deal worth about $2.1 billion. Shares of Luxottica gained.
Meanwhile buy-to-let mortgage specialist Bradford & Bingley enjoyed resurgence in the U.K. rental market, on the back of tightening interest rates, as it announced full-year profit was on track to top of analysts' expectations. Shares of the bank fell, in line with the FTSE-100.
Asian Markets Higher
Most Asian markets marched in to positive territory by the end of the trading session, with the Nikkei 225 reversing early losses.
Silver Seiko soared 30% after reports said the company has created smaller circuit boards and that the office equipment-maker planned to supply the new boards to Sharp in the fall.
Shares of Jaccs jumped more than 5% on news that the credit card company might form a capital tie-up and business alliance with Mitsubishi UFJ Financial.
In South Korea, the KOSPI moved higher by 0.6% to 1,797.08. Shares of Daewoo Shipbuilding and Engineering jumped after reporting May net profit more than doubled from a year earlier.
Hong Kong's blue-chip Hang Seng Index was 1.3% higher. Life insurers rallied after the government relaxed overseas investment laws for brokerages and hedge funds.
Shares of Hong Kong Exchanges and Clearing hit a record peak of HK$110.80 on hopes that more mainland funds will be funnelled in to the Hong Kong market.