U.S. Stock Indexes Climb After Retail Results

NEW YORK (MarketWatch) -- U.S. stocks on Thursday reclaimed higher ground following a three-day downward spiral, after jobless claims dropped more than forecast and Wal-Mart Stores Inc.'s and Costco Wholesale Corp.'s same-store-sales results topped expectations.

"It looks like the stimulus checks didn't all go into the gas tank. They actually went into some of the retailers, and hopefully that will continue," Ken Perkins, president of Retail Metrics, said of Thursday's batch of sales numbers from major retailers. .

"The worst is behind us, but until we get some positive news on inflation and economic growth as it relates to the second quarter, we're likely to remain range bound," said Matt King, chief investment officer at Bell Investment Advisors.

After a three-day decline, the Dow Jones Industrial Average rose 144.76 points to 12,535.24, with 24 of its 30 components heading higher.

Blue-chip gainers included Wal-Mart , shares of which added 3.3%. The world's largest retailer reported same-store sales increased 3.9% for May.

American Express Co. rallied for a second day, recently up 3.2%, after the company reiterated expectations that earnings would grow 4% to 6% this year.

Pfizer Inc. led declines on the Dow, recently off 1.5%.

The S&P 500 climbed 17.90 points to 1,395.1, with the energy sector up 2.8%, and setting the pace for broad-based gains among the index's 10 industry groups.

Telecommunication services also rose, up 1.9%, with the sector catching a lift from Verizon Wireless's plan to buy privately held Alltel Corp. for $28 billion. .

Shares of Verizon Communications Inc. gained 6.6%.

Crude rise

Oil prices turned higher on the New York Mercantile Exchange, with the July benchmark crude contract gaining $4.10, or 3.4%, to $126.40 a barrel. .

"The price of any commodity is volatile, but the days of double-digit oil prices are gone. It's a demand-driven push right now; and there's not enough supply," said King.

"Commodity-based energy and materials remained the best-performing sectors last month, as prices of hard goods continue to escalate. Year to date, these sectors have advanced more than 6% while all other market groups remain under water," said Jack Ablin, chief investment officer, Harris Private Bank.

Escalating fuel costs are prompting Continental Airlines Inc. to scale back, with the nation's fifth-largest airline announcing plans to cut about 3,000 jobs and reduce its fleet size. Shares of Continental rose 4.1% in the early going. .

The Nasdaq Composite gained 32.75 points to 2,535.89.

Volume hit 708 million on the New York Stock Exchange, with advancing stocks topping decliners 3 to 1. On the Nasdaq, 543 million shares changed hands, with advancers outrunning decliners more than 2 to 1.

On Wednesday, the major indexes struggled in the face of Moody's threatened downgrades of two large bond insurers, with only the technology-laden Nasdaq ending higher.

The equities market drew pre-opening support from the Labor Department's report on first-time claims for unemployment benefits, which fell by 18,000 last week to its lowest level in more than a month. The government will report pivotal figures on nonfarm payrolls Friday morning. .

The latest jobs data "put a positive spin on the employment indicators as we approach Friday's jobs report," said analysts at Action Economics.

By Kate Gibson