Stocks break losing streak
Wall Street crawls back after a two-session plunge, as oil prices retreat from recent records and the dollar recovers.
NEW YORK (CNNMoney.com) -- Stocks rose Thursday, ending a two-session losing streak, as oil prices took a break from the recent march higher, allowing investors to dip back in to equities.
Bond prices slumped, boosting the corresponding yields for the second session, on ongoing concerns about rising inflation.
The Dow Jones industrial average (INDU) added 0.2% and the broader Standard & Poor's 500 (SPX) index added 0.3%. The Nasdaq composite (COMP) added 0.7%.
Stocks had been stronger in the early afternoon, but the advance lost some steam by the close, ahead of the long holiday weekend. All financial markets are closed Monday for Memorial Day, and some Wall Street pros will be making a four-day weekend of it - skipping out early or altogether on Friday.
Stocks tumbled in the previous two sessions, with the Dow losing more than 425 points, as investors reacted to skyrocketing oil and gas prices, plus a gloomy economic and inflation outlook from the Fed.
The focus this week has been all about oil prices, and how market participants see its rise in relation to bets about consumer spending, said John Wilson, chief technical strategist at Morgan Keegan.
"As oil has been rising for some time now, every $10 or so, the market has stopped to asses it and determined, OK, we can handle this," Wilson said. "But when oil hit $130 and $135 this week, the realization set in that, yeah, the consumer is really going to get hit."
A slight retreat from those highs Thursday was giving stocks a lift, he said, but investors don't believe that the runup in oil prices is done, so stock gains were minimal.
Markets Friday will likely take a cue from the April existing-home sales report, due out before the start of trade. There are no market-moving earnings expected.
Commodities: Oil prices hit a record high above $135 a barrel before retreating. Gas prices hit another all-time high, inching ever closer to $4 a gallon. Gold prices declined.
U.S. light crude oil for July delivery hit a new electronic trading record of $135.09 a barrel before pulling back to settle at $130.81 a barrel on the New York Mercantile Exchange, a decline of about $2.36.
Oil has been spiking aggressively of late, amid ongoing global supply concerns and the impact of the weak dollar, which makes dollar-traded commodities like oil less expensive for international investors to buy.
The national average price for a gallon of regular unleaded gas rose to a record $3.831 from the previous day's record high for gas.
COMEX gold for August delivery fell $10.20 to settle at $923 an ounce.
Company news: Ford said it will cut production through the rest of 2008 amid rising oil prices and the sluggish economy, and is no longer expecting to return to profitability next year. Ford (F, Fortune 500) shares slumped 8.2% and dragged on fellow automaker General Motors (GM, Fortune 500). (Full story).
UBS (UBS) said Thursday that it would raise about $15.5 billion in capital at a deep discount below the current share price. The investment bank also said it sold subprime and other mortgage-backed assets to a new investment fund run by BlackRock (BLK, Fortune 500) for $15 billion.
Regardless, UBS shares rose, along with other financial stocks, including Dow components American Express (AXP, Fortune 500), Citigroup (C, Fortune 500) and JPMorgan Chase (JPM, Fortune 500).
NRG Energy said it has made a bid for rival power wholesaler Calpine for around $11.3 billion in stocks. NRG (NRG, Fortune 500) shares fell 5%, while Calpine (CPN, Fortune 500) shares added 8%.
Evergreen Solar (ESLR) rallied 20% in active Nasdaq trade, after the solar-panel producer said it has received two long-term contracts worth around $1 billion.
Market breadth was positive. On the New York Stock Exchange, winners edged losers 8 to 7 on volume of 1.21 billion shares. On the Nasdaq, advancers topped decliners 3 to 2 on volume of 1.94 billion shares.
Economic news: The prices of homes sold in the first quarter fell 3.1%, according to a U.S. government report released Thursday. It was the biggest quarterly decline since the agency started keeping records 17 years ago. (Full story).
Another report showed that the number of Americans filing new claims for unemployment fell last week, surprising economists who were expecting a slight rise. (Full story).
Other markets: The dollar rose versus the euro and yen.
Treasury prices tanked, raising the yield on the 10-year note to 3.91% from 3.81% late Wednesday. Bond prices and yields move in opposite directions. 
