Stocks find momentum

NEW YORK (CNNMoney.com) -- Stocks surged Thursday afternoon, finding momentum after a choppy morning marred by higher oil prices, weak economic news and dour April retail sales forecasts.

The Dow Jones industrial average (up 50.95 to 12,535.57, Charts) and the broader S&P 500 (up 6.36 to 1,445.23, Charts) index both added about 0.4 percent with roughly 90 minutes left in the session. The Nasdaq (Charts) composite gained 0.6 percent.

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The major gauges had declined in the early going, extending the previous session's big selloff. But the tone improved as the session wore on, with technology, biotech, energy, railroads and homebuilders leading the way.

Dell (up $0.45 to $24.70, Charts), Applied Materials (up $0.25 to $19.48, Charts) and Amgen (up $1.33 to $57.67, Charts) were among the heavily-traded stocks rising. MedImmune (up $4.92 to $42.76, Charts) jumped 13 percent in unusually active trading after the biotech said it had hired Goldman Sachs to help it explore a sale of the company.

A rally in the railroad sector lifted the Dow Jones Transportation (up 71.06 to 5,041.08, Charts) average by 1.5 percent.

Stocks tanked Wednesday - and fell again early Thursday - after the minutes from the last Federal Reserve policy meeting made it clear that the central bank is unlikely to cut interest rates anytime soon.

Investors have been looking for signs that the Fed might lower borrowing costs, which can ultimately stimulate business and earnings and boost stock prices. However, the minutes - echoing the sentiments of recent Fed speakers - showed that the bankers aren't likely to budge, or could even raise rates this year as they balance rising inflationary pressures and a worsening economy.

Thursday's batch of weaker economic reports and weaker retail sales forecasts played into such concerns. The number of Americans filing new claims for unemployment jumped last week. Additionally, March import prices jumped more than expected.

"Investors are trying to work through whether yesterday was a one-day event or a reality check," said James Awad, president at Awad Asset Management.

After slumping in late February on global growth concerns, stocks spent March recovering, earning back most of what was lost. But concerns about the growth versus too much growth issue are likely to continue to limit any market advance.

Looking forward, "you're going to have bi-polar worries on both sides, but the reality will be down the middle, with good enough growth for profits, but not so much as to push inflation," Awad said.

He said in the short term, stocks may get an upward push from earnings, simply because expectations for the first quarter are so diminished that companies are likely to beat forecasts.

Wal-Mart Stores (up $0.15 to $47.42, Charts), Target (up $0.44 to $60.12, Charts) and Nordstrom (up $0.86 to $55.71, Charts) were among the retailers that reported better-than-expected March sales, but warned about April sales.

Sprint Nextel (up $0.55 to $19.73, Charts) shares gained on reports that activist shareholder Ralph Whitworth has built a nearly 1 percent stake in wireless telecom and is calling for big changes at the company.

Railroad stocks continued to rise following last week's news that Warren Buffett's Berkshire Hathaway bought a 10.9 percent stake in Burlington Northern Santa Fe (up $3.50 to $91.15, Charts).

Nestle is expected to announce a $5 billion deal to buy baby-food maker Gerber from Swiss drugmaker Novartis (Charts), according to reports late Wednesday.

BlackBerry maker Research In Motion (Charts) reported a sharply higher fourth-quarter profit Wednesday, but also said the Securities and Exchange Commission has upgraded its informal probe into its stock options practice into a formal investigation. Shares slumped 8 percent Thursday.

Biotech Genentech (Charts) reported quarterly sales and earnings that topped forecasts, but its shares slumped Thursday.

Bed Bath & Beyond (down $0.53 to $40.20, Charts) reported higher quarterly earnings that missed estimates, sending shares lower.

U.S. light crude oil for May delivery rose $1.49 to $63.50 a barrel on the New York Mercantile Exchange after the government reported a big drop in gasoline supplies Wednesday.

Treasury prices slipped, lifting the yield on the benchmark 10-year note to 4.73 percent, little changed from late Wednesday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar fell against the euro and the yen.

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