U.S. stocks rally to reclaim positive ground for 2015

U.S. stocks rebounded Thursday from a two-day rout, with equities back in positive terrain for the year, after economic reports signaled ongoing improvement in the labor market and an unexpected decline in retail sales.

"Jobless claims numbers are back to what I would consider supportive of better employment. The economic data in general has been just okay, and certainly not supportive of 3 percent plus GDP growth, and retail sales fit into that," Paul Nolte, senior vice president and portfolio manager at Kingsview Asset Management, told CBS MoneyWatch. "There's also a little bit of bargain hunting after a couple of lousy days. That's been the M.O. for the market in recent days."

Figures from the Commerce Department had retail sales falling 0.6 percent in February, as winter weather curbed shopping.

"Retail sales were a bit of a disappointment against estimates, which gives some credit to the idea that the Fed might wait longer," said Jim Dunigan, chief investment officer for PNC Wealth Management, referring to the timing of interest rate hikes by the Federal Reserve, which holds its next policy meeting March 17-18.

"The prospect of moving off the zero interest-rate policy is driving volatility," Dunigan added of the market's roller-coaster ride.

Another report from the Labor Department had initial claims for jobless benefits dropping 36,000 last week to a three-week low of 289,000.

Intel (INTC) cut its first-quarter sales outlook, with the chip manufacturer pointing to less-than-expected corporate demand for computers and a softening global economy.

The Dow Jones Industrial Average (DJI) rallied 259.89 points, or 1.5 percent, to 17,895.28, with Walt Disney leading blue-chip gains that included 26 of 30 components.

The S&P 500 (SPX) rose 25.71 points, or 1.3 percent, to 2,065.95, with the financial sector leading gains and energy the sole laggard among its 10 major industry groups.

"The banks are breathing a sigh of relief around the stress tests, announced yesterday, which was essentially good news for most of them, and gave a bid to financials," said PNC's Dunigan.

The Fed on Wednesday gave its approval to major U.S. banks to increase dividends and repurchase shares, saying they had stabilized to the point of being able to withstand a large economic downturn.

Bank of America (BAC), however, drew conditional approval due to what the Fed viewed as weaknesses in its strategy for dealing with risks and possible losses. Its shares slipped.

The Nasdaq Composite (COMP) gained 43.35 points, or 0.9 percent, to 4,893.29.

The price of oil fell, with crude futures down 2.3 percent at $47.05 a barrel; gold futures rose $9.10 to $1.159.70 an ounce.

The U.S. dollar edged lower against the currencies of major U.S. trading partners and the 10-year Treasury yield used in figuring mortgage rates and other consumer loans was little changed at 2.1 percent.

Thursday's advance comes after a two-session slide that had the Dow losing 360 points.