Stocks advanced Thursday, but ended well off their earlier highs, amid weakness in techs and consumer discretionary as oil topped $73 a barrel.
The Dow Jones Industrial Average rose 31.90, or 0.4 percent, to close at 8,770.92 after being up more than 100 points earlier. The S&P 500 gained 0.6 percent and the Nasdaq added 0.5 percent.
Crude oil gained nearly 2 percent to settle at $72.68 a barrel, after reaching a high earlier above $73 a barrel.
Stocks got an early boost from the pre-market economic reports, which showed jobless claims fell last week and retail sales ticked higher in May.
Initial claims for unemployment benefits fell by 24,000last week to 601,000, a much sharper drop than expected. This comes after the May jobs report showed an unexpectedly small number of job losses.
Meanwhile, retail sales rose 0.5 percent in May, the first gain in three months, boosted by rising gasoline prices. And business inventories shrunk by 1.1 percent in April, the eighth straight month that businesses have pared back their inventories.
The government sold $11 billion of 30-year bonds at a yield of 4.72 percent, lower than where the 30-year was before the auction.
At first glance, the auction results sent investors out of stocks and into the relative safety of bonds but after further consideration, investors jumped right back into buying stocks.
"Rates are back up so much that at some point you've got to reach parity between supply and demand; maybe we've reached that point after the move we've had in the last month or so," John Schloegel, vice president of investment strategies at Capital Cities Asset Management, told Reuters.
Investors have become increasingly concerned about bond yields, as evidenced by a negative reaction to yesterday's 10-year note auction, which saw a higher than expected yield of 3.99 percent, which briefly sent the 10-year yield above 4 percent. The yield on the 10 year was back below 3.9 percent Thursday.
Bank of America rose 8.3 percent after KBW raised its rating on the stock to "outperform" from "market perform," citing valuation and its balance sheet.
Bank of America CEO Ken Lewis was on Capitol Hill today, grilled about the degree of pressure he received from the governmentto complete the acquisition of Merrill Lynch late last year.
One analyst said Bank of America shares can triplein the next two years.
UBS shares climbed 3.8 percent after the bank said it doesn't see any additional layoffs.
Goldman Sachs said it remains cautious on regional banks as the pre-tax return for these banks is about 1.5 percent, less than the 2 percent at the bigger banks. Still, Goldman raised its rating on several regional banks, bumping Regions Financial and Fifth Third up to "buy" and BB&T and Huntington to "neutral." Those stocks gained 2 to 10 percent.
GlaxoSmithKline rose 4.1 percent as the drug maker has begun cutting some of its drug prices in Asia in an effort to boost global sales by making its products more affordable.
Shares of Palm jumped 12 percent after the smartphone maker tapped former Apple executive Jon Rubenstein as its next chief executive officer, succeeding Ed Cooligan.
But other tech stocks declined, notably chip stocks ahead of earnings from National Semiconductor after the closing bell.
And retail stocks finished in the red, including Macy's , Gap and even Wal-Mart .
Del Monte Foods jumped 8.8 percent after the company, which makes everything from Meow Mix to canned peas, beat profit expectations, helped by price increases and cost cuts, and delivered a better-than-expected outlook.
Still to Come:
THROUGH FRI: Apple developers' conference
THURSDAY: Earnings from Nat Semi after the closing bell
FRIDAY: Import/export prices; consumer sentiment
- Peter Schacknow, Senior Producer, CNBC, contributed to this report.