Stocks bounced back from a weak open as a better-than-expected report on manufacturing and wave of deal news gave traders cause for optimism.
Major indexes had opened lower amid a surge in oil and weaker-than-expected economic reports, though with pockets of strength including large-cap techs, energy, housing and banks.
Crude oil crept up toward $127 a barrel after settling Wednesday at $124.22 on the New York Mercantile Exchange.
The Philadelphia Federal Reserve reported its May reading of regional manufacturing activity came in at minus 15.6, less than expected and better than the minus 24.9 reading recorded in April.
Earlier, the New York Federal Reserve reported its Empire State manufacturing index slippeddropping to minus 3.23in May from 0.63 in April; economists had expected a flat reading. Both the Philadelphia and New York readings are closely watched for insight ahead of the national report on manufacturing from the Institute for Supply Management.
In other economic news, industrial production fell 0.7 percent in April, more than double of what was expected, and far less than the gain of 0.2 percent recorded in March. Capacity utilization dropped to 79.7, the lowest reading since September 2005. A separate report showed jobless claims rose 6,000, slightly more than expected, last week; the four-week moving average, however, fell to 365,750 from 366,750.
Fed Chairman Ben Bernanke said turmoil in financial markets underscores the need for "generous" capital cushions as big banks. he also said regulators were pushing for more transparency at financial institutions, in a speech delivered at a Chicago banking conference.
CNET shares soared more than 40 percent after CBS announced plans to buy CNET for $11.50 per share, or $1.8 billion. CBS Chief Executive Les Moonves announced the deal, which would catapult the broadcast and media giant to one of the top 10 Internet companies, about two hours before trading began. The price tag amounts to a 41 percent premium on CNET's Wednesday closing price of $7.95.
Yahoo shares jumped amid news that billionaire investor Carl Icahn has decided tomove ahead with a proxy fight for the Internet giant, according to sources familiar with the matter. Icahn, who has amassed a large stake in the Internet company, has lined up at least 12 potential board candidates and the deadline for nominating a dissident slate is today.
Elsewhere in technology, Hewlett-Packard shares were one of the top gainers on the Dow, rebounding for a second day after a two-day pounding following news of its plan to acquire IT-services firm EDS .
HP is expected to report earnings after the closing bell.
General Motors was among the other big blue-chip gainers after the auto maker reached a tentative agreement with a local unionthat could end a monthlong strike at a Michigan plant that makes some of GM's hottest-selling vehicles. The agreement gave investors hope that GM may finally be coming to terms with the UAW. Another strike is still going on in Kansas and one scheduled to start this week in Ohio was canceled.
General Electric is planning to sell its appliances unit, which could fetch up to $8 billion, the Wall StreetJournal reported. (GE is the parent company of CNBC and this Web site.)
United Airlines and Continental Airlines are in talks to form an alliance that would provide benefits without the carriers having to go through a merger, which Continental rejected last month, according to a person close to the talks.
In earnings, JC Penney reported its profit plunged 50 percent but beat expectations.
Shares of Blockbuster rose after the movie-rental chain reported a profit of 20 cents per share, surpassing expectations by 5 cents.
Blackstone shares slipped after the private-equity and real-estate firm reported it swung to a loss of $93.6 million, or 6 cents a share, compared with a profit of $957.8 million, or 75 cents a share a year earlier.
Still to Come:
THURSDAY: Earnings from HP and Kohl's after the bell
FRIDAY: Housing starts; consumer sentiment
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