Wall Street mixed in wobbly session

Stocks struggle as weakness in oil and bank shares temper rally in tech. Investors take Chrysler bankruptcy in stride.

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By Alexandra Twin, CNNMoney.com senior writer

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NEW YORK (CNNMoney.com) -- Stocks ended mixed Thursday after an earlier rally lost steam, as weakness in financial and oil stocks vied with strength in technology and industrial shares.

Investors seemed to take in stride news that Chrysler filed for bankruptcy, a development that boosted shares of rivals General Motors (GM, Fortune 500) and Ford Motor (F, Fortune 500).

The Dow Jones industrial average (INDU) lost 17 points or 0.2%. The S&P 500 (SPX) index ended just below unchanged. The Nasdaq composite (COMP) rose 5 points, or 0.3% and ended at a nearly six-month high.

Stocks had rallied broadly in the early going as investors continued to welcome signs that the pace of the economic slowdown appears to be easing. But after an early upswing, stocks turned mixed, with oil, gold and other commodities shares dropping.

Stocks rose Wednesday after the Federal Reserve gave a more upbeat outlook on the economy and the otherwise bleak first-quarter GDP report showed a surprise rise in consumer spending.

Bets that the economy is not far from finding its footing have boosted stocks for nearly two months, lifting the Dow by roughly 25% since it hit 12-year lows on March 9.

"Given the incrementally positive economic data we've seen over the last month or so and the thawing in the credit markets, stocks have been performing better," said James Moore, equity research department, Morgan Joseph.

"These gains could continue, but that will depend on the banks getting healthier," he said. "In the short term, the results from the stress tests will tell us how they are doing."

On Monday, the government releases the results of its "stress tests" of the nation's largest banks. Jitters ahead of the results have weighed on financial stocks recently, particularly after reports circulated earlier this week that said Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500) will both need to increase their capital should the economy deteriorate further.

Friday brings earnings reports from Chevron and economic reports on consumer sentiment, factory orders and auto and truck sales. The biggest potential market mover will be the Institute for Supply Management's manufacturing index.

Chrysler: The automaker filed for Chapter 11 bankruptcy protection Thursday, confirming earlier reports. However, a deal has been negotiated to combine the company with Italian automaker Fiat - allowing it to stay in business.

Chrysler was fighting against the clock to reduce debt, but some of the automaker's smaller lenders balked at giving in to the Treasury Department's demands to reduce the amount of debt outstanding. Chrysler already reached an agreement with its union on concessions, another necessary step if it had wanted to avoid bankruptcy.

The company will continue to operate while under bankruptcy protection. (Full story)

Investors seemed to take the news in stride as both Chrysler and rival General Motors have been flirting with the threat of bankruptcy for months.

Oil companies: Dow component Exxon Mobil (XOM, Fortune 500) reported weaker earnings that missed analysts' forecasts on weaker revenue that topped forecasts. Shares fell 2.6%.

Other oil stocks fell too, including Dow component Chevron (CVX, Fortune 500), Halliburton (HAL, Fortune 500) and Schlumberger (SLB).

Quarterly results: Dow component Procter & Gamble (PG, Fortune 500) reported weaker earnings that topped estimates on weaker revenue that missed estimates.

Fellow consumer products maker Colgate-Palmolive (CL, Fortune 500) also posted lower earnings that beat forecasts on lower revenue that missed expectations.

Starbucks (SBUX, Fortune 500) reported weaker earnings after the market close Wednesday that nonetheless topped estimates.

In other company news, Bank of America (BAC, Fortune 500) said late Wednesday that Ken Lewis had been removed as chairman, but will stay on as CEO and president.

Market breadth was mixed. On the New York Stock Exchange, winners beat losers by eight to seven on volume of 1.74 billion shares. On the Nasdaq, advancers and decliners were roughly even on volume of 2.86 billion shares.

Economy: Weekly jobless claims slipped to 631,000 last week from a revised 645,000 the previous week. Economists surveyed by Briefing.com expected 640,000 new claims. Continuing claims - the number of people receiving benefits for a week or more - topped 6.27 million for the first time.

Personal income and spending fell more than expected in March. Income fell 0.3% after falling 0.2% in February. Economists thought income would fall 0.2%. Spending fell 0.2% after rising 0.4% in February. Economists thought it would fall 0.1%.

The Chicago PMI, a regional read on manufacturing, continued the recent trend of not-as-bad-as-expected reports. The index rose to 40.1 in April from 31.4 in March, a 7-month high and well above economists' expectations for a rise to 35.

The Labor Department's Employment Cost Index rose by 0.3% in the first quarter, the lowest rise on record and short of the 0.5% increase economists were expecting.

Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.11% from 3.09% Wednesday. Treasury prices and yields move in opposite directions.

Lending rates were mixed. The 3-month Libor rate fell to 1.02% from 1.03% Wednesday, according to Bloomberg.com. The overnight Libor rate was unchanged at 0.23%. Libor is a bank-to-bank lending rate.

Other markets: In global trading, Asian and European markets ended higher.

In currency trading, the dollar gained versus the euro and the yen.

U.S. light crude oil for June delivery rose 15 cents to settle at $51.12 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $9.30 to settle at $891.20 an ounce. To top of page

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