Stocks rally after retreat
Investors look beyond weak economic reports and opt to scoop up shares hit in the recent selloff
NEW YORK (CNNMoney.com) -- Stocks rallied Thursday, bouncing back after several down sessions as investors weighed some weaker-than-expected reports with growing economic optimism.
The Dow Jones industrial average (INDU) gained 46 points, or 0.5%. The S&P 500 (SPX) index rose 9 points, or 1%. The Nasdaq composite (COMP) gained 25 points, or 1.5%.
The S&P and Nasdaq fell for three sessions in a row and the Dow fell for two of the last three sessions as investors stepped back after the earlier spring rally.
But on Thursday, investors used the recent selloff as an opportunity to dip back into stocks, particularly technology, telecom and consumer issues.
Bets that the economy is closer to stabilizing has fueled the recent rally, lifting all three major gauges by more than 30% over 9 weeks. But a few recent reports have raised worries that investors may have gotten ahead of themselves, including Wednesday's weak retail sales report and Thursday's surprise rise in jobless claims.
"The thinking today is that we have had a couple of bad numbers, but they are not enough to derail the perspective that conditions are not as bad as they have been and are getting better," said Phil Orlando, chief equity market strategist at Federated Investors.
"The question going forward will be whether these were random reports or an indication of a reversal," he said. "There will be other disappointing reports, but I think the trend is still toward improving data."
Government reports are due in the morning on consumer prices, manufacturing, capacity utilization and industrial production and consumer sentiment.
Company news: Chrysler said it wants to close 789 dealerships, or roughly 25% of those in business, according to a plan filed in bankruptcy court.
General Motors (GM, Fortune 500) is expected to announce Friday that it will close 1,000 to 2,000 of its dealerships, according to reports.
GM said Thursday that it has agreed to accelerate payments to its parts suppliers, as it teeters closer to bankruptcy. The automaker has until the end of the month to gain enough concessions from its creditors and union to remain viable. However, GM is not expected to meet that deadline and the company's CEO has said that a bankruptcy is "probable."
Wal-Mart Stores (WMT, Fortune 500) reported higher quarterly earnings that met estimates on weaker revenue. The No. 1 retailer also forecast second-quarter earnings in a range that could surpass analysts' current forecasts. Shares fell 1.9%.
Market breadth was positive. On the New York Stock Exchange, winners topped losers by seven to three on volume of 1.52 billion shares. On the New York Stock Exchange, advancers beat decliners by two to one on volume of 2.23 billion shares.
Economy: The number of Americans filing new claims for unemployment last week surged to 637,000 from 601,000 the previous week, the Labor Department reported. The rise in jobless claims reflects the extensive layoffs in the auto industry after Chrysler filed for bankruptcy.
Economists surveyed by Briefing.com had expected 610,000 new claims.
The Producer Price index (PPI), a measure of wholesale inflation, rose 0.3% in April after falling 1.2% in March, according to a government report released Thursday. PPI was expected to rise 0.2%.
The so-called core PPI, which strips out volatile food and energy prices, rose 0.1% in the month, as expected, after holding steady in the previous month.
Bonds: Treasury prices inched higher, lowering the yield on the benchmark 10-year note to 3.10%, down from 3.11% Wednesday. Treasury prices and yields move in opposite directions.
Other markets: In global trading, Asian and European markets ended lower.
In currency trading, the dollar fell versus the euro and gained against the yen.
U.S. light crude oil for June delivery rose 60 cents to settle at $58.62 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery climbed $2.50 to settle at $928.40 an ounce. 
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