Stocks tried to rally after an unexpected drop in jobless claims and a pullback in oil prices, which earlier traded above $135 a barrel.
It was hard to gain traction, though, with all three major indexes -- the Dow Jones Industrial Average, S&P 500 and Nasdaq -- posting gains of about half a percent.
Jobless claims dropped by 9,000last week; economists had expected a slight uptick. The four-week moving average, however remained at a more than four-year high, climbing to 372,250.
Stocks held onto modest gains even after a report showed a significant drop in home prices during the first three months of the year. Home prices fell 1.7 percentin the first quarter from the prior quarter and were down 3.1 percent from a year earlier, according to Ofheo's seasonally-adjusted purchase-only index. Both drops were the lowest on record.
Federal Reserve Governor Randall Kroszner said the mortgage market is going to be slow to recover.
"Recovery in the mortgage market will take time and will require more market and regulatory discipline," Kroszner said in remarks prepared for delivery to a bankers' conference this morning on Amelia Island, Fla.
Ford shares skidded after the auto maker lowered its profit outlook, saying it no longer expects to return to profitability in 2009. The company also plans to cut North American production.
Rival General Motors was the biggest decliner on the Dow.
Pfizer shares , which are at a 1 1/2-year low, fell after researchers late Wednesday reported some disturbing physical side effects, including blurred vision and loss of consciousness, from the company's anti-smoking drug Chantix. These physical side effects, on top of the already-known psychological side effects that incude suicidal thoughts, were enought to prompt the FAA to ban use of the drug by pilots and air-traffic controllers.
Calpine shares surged after power company NRG Energy made an unsolicited $11-billion bidfor its rival.
Calpine, which emerged from bankruptcy earlier this year, said it was reviewing the bid to determine if it was in the best interests of its shareholders. It said it received the unsolicited proposal from NRG on May 14.
Crude oilpulled back to around $132-$133 a barrel after earlier jumping above $135 a barrel as supply concerns persisted. Those concerns were exacerbated by numbers released Wednesday by the Energy Information Administration showing an unexpected decline in crude reserves.
Pressure from oil's relentless ascent continued to manifest itself in a variety of ways.
Shares of Suntech Power Holdings , which have been under intense pressure all year, rose after the company reported better than expected quarterly earnings, citing swelling demand for renewable energy sources.
Quarterly earnings reports continued to wind down, but the market was watching news from a few retailers.
Women's clothing company Ann Taylor reported lower quarterly profit due to restructuring costs, but earnings of 47 cents a share were still slightly ahead of analyst estimates.
THURSDAY: Jobless claims; Fed's Kroszner speaks; Ofheo Q1 home-price report; Earnings from Gap; Libertarians choose presidential candidate
FRIDAY: Existing-home sales; Bond market closes early for Memorial Day holiday
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