Stocks stage comeback
Wall Street manages gains, with technology, healthcare and financials leading a comeback at the end of a tough session.
NEW YORK (CNNMoney.com) -- Stocks rose Thursday, erasing the day's losses after S&P's call that an end to mortgage writedowns is in sight gave investors a reason to scoop up shares hit in the recent market selloff.
The Dow Jones industrial average (INDU) added 0.3%, while the broader Standard & Poor's 500 (SPX) index rose 0.5%. The Nasdaq composite (COMP) rallied 0.9%.
All three major gauges had tumbled through the early afternoon, as investors mulled the bevy of signs suggesting slowing economic growth and rising inflationary pressures.
But Wall Street stabilized as the afternoon wore on, with financial shares cutting losses and technology, healthcare and homebuilding shares spearheading an advance.
Helping to spark the turnaround was a report out of S&P's ratings arm that said banks are about halfway through to a forecasted $285 billion in writedowns. The report offered some reassurance to investors who have been spooked by the lack of a timeline in terms of the potential end for mortgage writedowns.
However, the abrupt turnaround Thursday was typical of a week on Wall Street that saw the Dow surge 417 points one day and selloff the next, amid ongoing market volatility.
"I think that investors are behaving a little erratically right now and are trying to find reasons to be hopeful in the face of a lot of weak economic numbers," said Bryant Evans, portfolio manager at Cozad Asset Management.
He said that big swings of this nature are what tend to happen in a recessionary environment, or at least a slowing economy, as investors try to find a stock market bottom.
Record oil, gas and gold prices have pushed inflationary worries back to the forefront as investors wonder how the economy will withstand an environment of higher pricing pressure and slowing growth.
In light of this focus, Friday's consumer price index (CPI) will be especially market-moving, particularly ahead of next week's Federal Reserve policy meeting.
Stocks shake off a bevy of bad news. Stocks slumped in the morning as investors mulled record-high oil, gas and gold prices, the dollar at an all-time low versus the euro, weak retail sales and the potential collapse of mortgage bond fund Carlyle Capital.
"It's all pointing toward something really bad," said Gary Webb, CEO of Webb Financial Group. "That doesn't mean something really bad is going to happen, but you have a market driven by fear right now and that can become a self-fulfilling prophecy."
He said that on the upside, the stock market so far has managed to bounce off recent lows - after the Dow and S&P dropped more than 17% off the October highs and the Nasdaq dropped more than 23%. If stocks can continue to hold above those levels that would be a good indication that a bottom has been put in place.
Carlyle Capital collapse. Credit crunch fears remained front and center after Carlyle Capital, a fund run by Washington, D.C.-based private-equity firm Carlyle Group, said late Wednesday that it expects its creditors to seize all of the fund's remaining assets after negotiations to prevent its liquidation failed.
The company, which has seen the value of its home-loan assets plunge with the collapse of the housing market, said that it has defaulted on about $16.6 billion in loans as of Wednesday.
The news sparked worries that the Amsterdam-based fund's creditors will dump billions of dollars of weakened mortgage-backed securities on the market, depressing their value even more. This sent the dollar lower versus the yen and other international markets lower.
It also sent big U.S.-based financial stocks lower too, although the sector as a whole managed to recover by the close. An exception was Bear Stearns (BSC, Fortune 500), which slumped more than 7% on an analyst note out of Lehman Brothers.
Oil, gas and gold all rise. Commodity prices continued to surge Thursday, with oil hitting a record $111 a barrel, gas at an all-time high of 3.267 a gallon and gold prices surging past the $1,000 an ounce mark.
Helping fuel the run up in commodities was a further weakening of the dollar, which hit another all-time low versus the euro and a 12-year low against the yen.
Economic news. Retail sales tumbled 0.6% in February, surprising economists who were looking for sales to rise 0.2% on average, according to Briefing.com forecasts. Sales excluding autos fell 0.2%, missing forecasts for a rise of 0.2%.
The report seemed to counter bets that consumer spending will be able to hang on despite the broad slowdown in the economy.
The majority of company chief financial officers say the United States is now in a recession and is unlikely to recover until at least next year, according to a survey conducted by Duke University.
Foreclosures rose 60% in February versus a year earlier, according to a report from RealtyTrac, an online marketer of foreclosure properties. Foreclosures dipped from January levels.
January business inventories rose 0.8%, the government reported, after rising 0.6% in the previous month. Economists thought inventories would rise 0.5%.
Another report showed that weekly jobless claims were flat last week, while continuing claims continued to rise.
And in Washington, Treasury Secretary Henry Paulson presented a series of proposals aimed at overhauling the regulation of financial institutions.
Company news. Electronic Arts (ERTS) has turned hostile in its takeover offer for rival Take-Two Interactive, offering an all-cash tender offer to buy the company after Take-Two (TTWO)'s board rejected its initial bid.
Time Warner (TWX, Fortune 500) unit AOL is buying global social-networking site Bebo.com in an all-cash deal worth $850 million, the company said. Time Warner is the parent of CNNMoney.com.
In other news, Amgen (AMGN, Fortune 500) and Johnson & Johnson (JNJ, Fortune 500) received some good news when an FDA panel gave a surprise OK to keeping their anti-anemia drugs on the market for use by cancer patients.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 9 to 7 as 1.84 billion shares changed hands. On the Nasdaq, advancers beat decliners 3 to 2 on volume of 2.48 billion shares.
Other markets. U.S. light crude oil for April delivery rose 41 cents to settle at $110.33 a barrel on the New York Mercantile Exchange after hitting a record $111 during the session.
COMEX gold for April delivery added $13.30 to settle at $993.80 an ounce after hitting an all-time record of $1,001 an ounce earlier.
Treasury prices slumped, raising the yield on the benchmark 10-year note to 3.52% from 3.47% late Wednesday. Bond prices and yields move in opposite directions. 
