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NEW YORK (CNN/Money) -
Stocks managed a late-session rally Thursday, on a mix of strength in energy and commodity stocks, falling Treasury yields and some old-fashioned short-covering.
As of 6:00 p.m. ET, Nasdaq and S&P 500 futures pointed to a mostly flat open for the stock market Friday, when fair value is taken into account. Techs are likely to be weaker, amid Dell's disappointing revenue forecast.
The Dow Jones industrial average (up 91.48 to 10,685.89, Charts) added nearly 0.9 percent, the Nasdaq composite (up 16.74 to 2,174.55, Charts) gained around 0.8 percent, and the Standard & Poor's 500 (up 8.68 to 1,237.81, Charts) index added 0.7 percent.
Stocks rose in the morning on a retail sales report that was strong but not inflationary. But gains were challenged through most of the afternoon by record high oil prices.
However, a short-covering rally in the last 45 minutes of trade turned direction around again. Short covering refers to a process in which investors who have sold shares short to take advantage of a falling market buy them back.
A strong Treasury bond auction for 10-year notes gave a kick to Treasurys and helped the stock market as well, said Bryan Piskorowski, market analyst at Wachovia Securities.
U.S. light crude oil for September delivery rose 90 cents to settle at $65.80 a barrel on the New York Mercantile Exchange, a record close. Oil hit a record trading high of $66 a barrel earlier in the session.
The market did particularly well considering the rise in oil prices, Piskorowski added. But looking out the rest of the month, the going could get rougher, particularly with most of the earnings already out of the way, and little market-moving economic news on tap.
"Where's the next catalyst?" Piskorowski said. "We're near the upper end of the trading band and I wouldn't be surprised to see some backing and filling over the next few weeks."
After the close Thursday, Dell reported second-quarter earnings that rose from a year earlier and met estimates on revenue that rose from a year ago but missed estimates.
The personal computer maker also forecast slower revenue growth in the current quarter, due to weakness in select U.S. segments.
On the move
Energy and commodity stocks were particularly buoyant although a variety of stocks participated.
Aluminum producers Alcan (up $1.76 to $36.37, Research) and Alcoa (up $0.90 to $29.77, Research) both rose after UBS upgraded them to "buy" from "neutral."
Alcoa gained 3 percent and was one of the Dow 30's biggest gainers.
Oil stocks rose, in tune with the rise in oil prices.
Dow stock Exxon Mobil (up $1.05 to $60.95, Research) gained and the Amex Oil (up 9.59 to 1,002.46, Charts) index added 1 percent.
United Technologies (up $1.65 to $51.63, Research) gained 3 percent, and fellow component McDonald's (up $1.99 to $34.69, Research) jumped 6 percent. The fast-food retailer jumped on speculation about a private equity firm taking a stake in McDonald's real estate, Reuters said.
Fellow Dow stock Intel (down $0.06 to $26.82, Research) managed to recover from bigger losses and end the session just modestly lower after Goldman Sachs downgraded it to "in-line" from "outperform."
In other news, Yahoo! (up $0.75 to $34.94, Research) said it will pay $1 billion in cash for a 40 percent stake in Chinese Internet auctioneer Alibaba.com, making what analysts said was a big jump in the world's second-largest Internet market. Yahoo! shares gained 2.2 percent.
In earnings news, Target (up $0.11 to $55.65, Research) reported earnings Thursday morning of 61 cents per share, up from a year earlier and more than expected.
News Corp (up $0.59 to $18.03, Research) reported earnings of 22 cents per share late Wednesday, up from the previous year and above forecasts.
CEO Rupert Murdoch also said the media company was in advanced talks to buy a search engine. Additionally, News Corp. said it would extend its "poison pill" takeover defense for two more years after failing to secure a selection of its shares held by Liberty Media.
Marked breadth was positive. On the New York Stock Exchange, winners beat losers eleven to five on volume of 1.46 billion shares. On the Nasdaq, advancers edged decliners by three to two on volume of 1.57 billion shares.
July retail sales rose 1.8 percent, the Commerce Department reported Thursday morning, after climbing 1.7 percent in June. Economists surveyed by Briefing.com expected sales to grow by 2 percent. Sales, excluding autos, increased 0.3 percent, versus expectations for a gain of 0.6 percent.
The report seemed to fulfill the best-of-both-worlds scenario investors seek -- showing strong growth but not so strong as to raise inflationary fears.
Treasury prices rallied, lowering the yield on the 10-year note to 4.32 percent from 4.39 percent late Wednesday. Treasury prices and yields move in opposite directions.
In currency trading, the dollar fell versus the euro and the yen.
COMEX gold rose $8.90 to $450.90 an ounce, jumping with other dollar-traded commodities.
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