NEW YORK (CNNMoney.com) -- Stocks erased losses to end higher Thursday as a rally in commodity and consumer shares helped investors to look past dour reports on jobs and manufacturing.
Stocks were mixed to higher early in the session as investors weighed a rise in weekly jobless claims with better news out of Europe. But the tone turned negative after the release of weaker-than-expected readings on manufacturing and leading economic indicators (LEI).
Nonetheless, stocks managed to erase losses and end above breakeven, with the Dow sporting a small advance.
Markets have been choppy the last two session after the Dow jumped nearly 600 points, or 6%, in just over a week. That advance following a six-week selloff that saw the major gauges each lose more than 13%.
The concerns were tempered somewhat by reports out of Europe that showed Spain getting solid results for its bond auctions, easing worries that the country's fiscal woes could be in as bad as those of Greece. A separate report showed improved retail sales in Britain last month.
"I think people want to remain bullish when they look at corporate earnings and GDP, but that's tempered by debt issues in Europe and the recent retail and jobs reports, which have been pretty poor," said Robert Siewert, portfolio manager at Glenmede.
"Market participants are questioning whether the recent selloff was a typical market correction or the start of something more protracted," he said.
Worries that the European debt crisis could send the United States back into recession have dragged on U.S. stocks over the past two months.
Stocks were mixed Wednesday, after BP said it was canceling its quarterly dividend and establishing a $20 billion fund to cover damages related to the Gulf oil spill. BP (BP) remained in focus Thursday as chief executive Tony Hayward testified before a House committee.
Hayward told the committee he was "deeply sorry" for the catastrophe, after lawmakers lambasted him for being oblivious to the risks that led to the explosion at the Deepwater Horizon rig and subsequent oil leak.
Jobs: The number of Americans filing new claims for unemployment rose last week to 472,000 from 460,000 the previous week. Economists surveyed by Briefing.com thought claims would drop to 450,000.
Continuing claims, a measure of Americans who have been receiving benefits for a week or more, rose to 4,571,000 from 4,483,000 the week before, versus forecasts for a drop to 4,475,000.
Other economic news: The Philadelphia Fed index, a regional reading on manufacturing, fell to 8 in June from 21.4 in May, missing forecasts for a drop to 20, as activity slowed far more than expected.
Another report, LEI, rose 0.4% in May versus forecasts for a rise of 0.5%. LEI was flat in April.
The Consumer Price index, a measure of consumer inflation, fell 0.2% in May versus forecasts for a drop of 0.1%. CPI fell 0.1% in April. So-called core CPI, which strips out volatile food and energy prices, rose 0.1% as expected after showing no change in the previous month.
Euro: The euro rose 0.6% versus the dollar, continuing to recover after touching a four-year low of $1.188 last week. The dollar fell 0.7% against the yen.
On the move: The Dow managed to end higher, with Caterpillar (CAT, Fortune 500), Chevron (CVX, Fortune 500), Travelers (TRV, Fortune 500), IBM (IBM, Fortune 500) and Wal-Mart Stores (WMT, Fortune 500) providing the lift.
In company news, grocery chain Kroger (KR, Fortune 500) gained 3.3% after reporting higher-than-expected quarterly earnings and saying current-quarter sales are tracking roughly in line with the previous quarter.
Food and consumer products maker J.M. Smucker (SJM) reported higher quarterly net income, sending shares up 6.6%.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by a narrow margin on volume of 1.16 billion shares. On the Nasdaq, decliners topped advancers by a narrow margin on volume of 1.78 billion shares.
World markets: European markets gained. Britain's FTSE 100 rose 0.3%, Germany's DAX added 0.5% and France's CAC 40 gained 0.2%.
Asian markets were mixed. Japan's Nikkei lost 0.7% and Hong Kong's Hang Seng rose 0.4%. China's Shanghai Composite lost 0.4%.
Commodities: U.S. light crude oil for July delivery fell $1.10 to settle at $76.57 a barrel on the New York Mercantile Exchange.
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