Stocks rise despite oil spike
Wall Street ends higher as investors eye some better-than-expected April retail sales and take in stride rising oil prices.
NEW YORK (CNNMoney.com) -- Stocks rose Thursday, as investors welcomed some better-than-expected April retail sales, but gains were limited by record-high oil prices and weakness in the financial sector.
The Dow Jones industrial average (INDU) and the broader Standard & Poor's 500 (SPX) index both gained around 0.4%, while the Nasdaq composite (COMP) gained around 0.5%.
Stocks fell Wednesday, with the Dow losing more than 200 points as record oil prices above $123 a barrel gave investors reason to retreat after the recent rally. But investors managed to push stocks higher for most of Thursday, thanks to some retail sales reports that were less dour than anticipated.
"Yesterday was kind of a disaster, whereas today we got some slightly better news," said Art Hogan, chief market analyst at Jefferies & Co.
He said the better-than-expected sales from such companies as Wal-Mart Stores and Costco were important, as was the mostly upbeat economic news.
With most of the quarterly earnings reports already having been released, the focus over the next few weeks will be on the economic news and the direction of commodity prices.
The perception of the economy has shifted since the last Federal Reserve meeting, and that could continue to be a support in the weeks ahead, Hogan said - but that optimism is going to be limited if oil prices don't back off a bit.
After the close, Dow component AIG (AIG, Fortune 500) reported a steeper-than-expected quarterly loss and said it will look to raise $12.5 billion in capital.
Retail sales: Wal-Mart Stores (WMT, Fortune 500) reported that April sales at stores open a year or more, a metric known as same-store sales, topped expectations. However, the world's largest retailer was wary about the overall consumer spending outlook, and forecast that May sales either would be flat or gain up to 2%. Shares ended barely higher.
Target (TGT, Fortune 500) said April same-store sales rose 3.1%, missing forecasts for a rise of 4.5%. The company said sales were weakest in regions getting hit the hardest by the housing market collapse. Shares fell 2%.
Costco (COST, Fortune 500) reported an 8% increase in sales versus forecasts for an increase of 6.1%, while Gap (GPS, Fortune 500) posted a worse-than-expected decline of 6%. Costco and Gap shares both fell.
On the upside, shoe retailer Crocs (CROX) reported higher-than-expected quarterly revenue late Wednesday, and said that second-quarter and full-year 2008 profit is on target to meet previous forecasts, despite slowing U.S. retail trends. Crocs rallied 14.5% in unusually active Nasdaq trading.
Other movers: Metal, mining and oil services stocks rose in tune with the price of the underlying commodities, which have been rising for weeks. Dow components Alcoa (AA, Fortune 500), Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500) all gained.
On the downside, select financial shares fell, including Fannie Mae (FNM, Fortune 500), Washington Mutual (WM, Fortune 500), Bank of America (BAC, Fortune 500) and Wachovia (WB, Fortune 500). Wachovia fell despite a Credit Suisse First Boston upgrade to "neutral" from "underperform."
Economic news: The number of Americans filing new claims for unemployment fell by 18,000 last week to 365,000. Economists thought claims would post a narrower drop to 375,000 new claims. (Full story).
Another economic report showed that wholesale inventories fell 0.1% in March, missing forecasts for growth of 0.5%. February's reading was revised down to growth of 0.9% from an initial reading of 1.1%.
Commodity prices: The national average price for a gallon of regular unleaded gas rose to a record $3.645 from $3.618 the previous day, according to AAA.
U.S. light crude oil for June delivery rose 16 cents to settle at a record $123.69 a barrel on the New York Mercantile Exchange Thursday. Oil hit a record $124.49 in after-hours electronic trading.
COMEX gold for June delivery rose $11.10 to $882.30 an ounce.
Other markets: The dollar was little changed versus the euro and fell against the yen.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.78% from 3.84% late Wednesday. Bond prices and yields move in opposite directions. 
