Stocks Claw Higher; Chevron Leads Dow

Stocks recovered from a quick dip at the open, though gains were modest. Chevron led the Dow pack after saying it expects profits to improve in the third quarter.

The opening dip was a result of the dollar's strength after comments from Fed Chairman Ben Bernanke.

Bernanke said the Fed will eventually have to start tightening its monetary policyas the economy heals.

"Accommodative policies will likely be warranted for an extended period," Bernanke said in remarks prepared for delivery at a monetary policy conference at the Fed. "At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road."

That sent the dollar higher, and both gold and oil lower. On Thursday, gold reached as high as $1,060.40 an ounce.

The drop in commodities took a toll on stocks in the sector, including ExxonMobil and Freeport McMoran .

But Chevron shot higher, leading the Dow pack, after the company said it expects third-quarter earnings to be significantly higherthan the second quarter, helped by higher crude prices and gains from asset sales.

Rounding out the Dow's top three were JPMorgan and IBM .

The Chevron news built on the already positive start to earnings season after Alcoa, the first Dow component to report, beat on both profit and revenue forecasts.

This earnings season comes down to one word: Revenue. Traders are over earnings beats that come from cost-cutting and are now saying show me the revenue — a sign that your business is growing, not just that you can steer the ship through a downturn.

In the day's only economic data point: The trade balance unexpectedly dropped to $30.71 billion in August; economists had expected it to widen to $33 billion.

Chip stocks rallied after Deutsche Bank raised its forecast on the semiconductor industry for the rest of the year, saying it likes Intel and Sandisk in particular. Sandisk makes chips for cellphones, portable-music players and other gadgets.

UBS also weighed in on Intel, saying it thinks the chip giant could surpass its Q3 sales forecast, based on recent checks.

And shares of BlackBerry maker Research In Motion rose after RW Baird upgraded the stock to "outperform" from "neutral," citing an upcoming product launch.

Citigroup shares struggled after a Wall Street Journal report said the Federal Deposit Insurance Corp is questioning a positive government review of the company's management in the aftermath of the financial crisis.

In deal news, Occidental Petroleum has agreed to buy Citi's commodities-trading unit — you know, the one with the $100 million trader — for about $250 million.

And Kimberly-Clark , maker of Kleenex tissues and Huggies diapers, has agreed to buy I-Flow, a maker of drug-delivery systems, for $324 million. This is KC's second deal to expand its medical-device business in a week. Earlier this week, Kimberly-Clark said it acquired Baylis Medical's pain-management business.

Friday marks a notable anniversary on Wall Street: It was two years ago — on October 9, 2007 — that both the Dow and the S&P 500 finished at their all-time closing highs. The Dow finished that day at 14,164.53, while the S&P 500 closed at 1565.15.

While those averages are still currently about 30 percent below that level, they're also about 50 percent ABOVE their lows reached back in March, and they're also about to complete their best week in some time, depending on Friday's results.

At the moment, the Dow, the S&P 500, and the Nasdaq are on pace for their best weekly percentage gains since the week ending July 24.

At 12:15 pm, Federal Reserve Vice Chairman Donald Kohn will give a speech on monetary policy in Washington.