Stocks turned mixed Thursday as a rise in commodities stocks offset pressure from a weak jobs report and a sharp drop in import prices.
The Dow flirted with positive territory, led by Alcoa , Merck and Chevron . The S&P also dabbled in the green. The Nasdaq, however, remained lower.
Crude oil rose more than $3, trading between $46 and $47 a barrel.
The number of U.S. workers filing new claims for jobless benefits surged to a 26-year highlast week, the Labor Department reported, as a deepening recession forced employers to cut back on hirings.
Also, U.S import prices saw their largest monthly decline on record in November and the U.S. trade deficit widened unexpectedly in October.
In addition to the troubling economic news, the shaky status of the auto bailout weighed on investor sentiment.
The perceived success or failure of the auto bailout, "quite frankly is what's going to make or break the near-term for this market environment. We're watching history unfold," Charles Lemonides, founder & chief investment officer of ValueWorks LLC, told "Worldwide Exchange."
The proposed $14 billion bridge loan for General Motors, Ford and Chryslernow faces the Senate, which looks set to offer fierce opposition to the bailout.
The bill was cleared by the House of Representatives Wednesday after weeks of wrangling and pleas from union representatives.
Shares of both GM and Ford skidded.
Dow component Procter & Gamble said it was on track to meet its earnings forecast for both the current quarter and the full year, though sales will probably be weaker than expected because of the recession.
The world's largest consumer products maker expect earnings $1.58 to $1.63 per share for the quarter through December, its fiscal second quarter, and $4.28 to $4.38 per share for the fiscal year 2009.
Fellow Dow component Boeing also saw its shares come under pressure after the airline said it was delaying the first flight of its highly anticipated Dreamliner 787 until the second quarter of 2009 and won't ship its first delivery until the following year.
Boeing attributed the delay to this year's machinists strike and production problems.
Also, drug makerEli Lilly projected that 2009 results would be hurt by its acquisition of ImClone Systems and weaker foreign currencies.
Big-box retailer Costco Wholesale's quarterly profit rose slightly as strong results from its gasoline stations helped to offset weak consumer demand for all but the most essential household items.
Meanwhile, the bleak outlook for the economy led consumers to cut their spending in November as U.S. retail sales excluding autos posted their biggest monthly drop in five years.
In political news, President-elect Barack Obama will nominate Steven Chu as his energy secretary, according to NBC News. Chu is currently director of the Lawrence Berkeley National Laboratory and was a recipient of the 1997 Nobel Prize in physics.
Energy remained in focus as the price of oil made firm gains ahead of the open after the International Energy Agency said global demand would grow in 2009.