Stocks make a comeback

NEW YORK (CNNMoney.com) -- Stocks ended higher Thursday, erasing a steep morning selloff sparked by Greek debt default worries, a spike in the dollar versus the euro and a plunge in commodity prices.

Also in focus: President Obama's speech on financial reform, a better-than-expected housing market report, a mixed reading on weekly jobless claims, a rise in wholesale inflation and the latest round of corporate profit results.

The Dow Jones industrial average (INDU) gained 9 points, or 0.1%, having been down as much as 108 points in the morning. The S&P 500 index (SPX) rose 3 points, or 0.3%. The Nasdaq composite (COMP) rose 14 points, or 0.6%.

Fears that Greece's fiscal problems are even worse than expected sent global markets lower Thursday, lifting the dollar against the euro and pummeling the commodity sector.

But U.S. stocks managed to fight off the selling pressure as the session wore on, with commodity and financial shares erasing losses.

Rather than driven by a specific event, the recovery was a function of all the cross currents in the market, said John Wilson, chief technical strategist at Morgan Keegan.

"We started with worries about Greece, and you would have thought Obama's speech might have riled up markets, but stocks seem to be resistant to a big decline right now," he said.

"Earnings have been better than expected, but the response hasn't been much," he said. "We seem to be stalling here."

He said that he doesn't expect a big selloff in the coming weeks, but that stocks look to be moving into a more extended consolidation phase.

Stocks have risen over the last few months, with the Dow and Nasdaq rising in 8 of the last 9 weeks and the S&P 500 climbing in 7 of the last 9 weeks.

After the close, Microsoft (MSFT, Fortune 500) posted a higher quarterly profit that surpassed forecasts, due to a continued strong response to it Windows 7 operating system, introduced six months ago, as well as its Bing search engine.

Also after the close, Amazon.com (AMZN, Fortune 500) reported earnings that jumped 68% from a year ago, surpassing forecasts, on higher sales that also beat expectations.

Greece: Worries that the nation might default on its debt have dragged on stocks for the last few months, countering improved earnings and signs of stability in the global economy. Investors fear that a Greek default could trigger a bigger debt crisis in other strapped euro zone nations, destabilizing the euro and threatening the strength of the global economic recovery.

Fears were tempered last week when the European Union (EU) and the International Monetary Fund agreed to make billions in loans available to Greece at below market rates.

However, concerns were reignited Thursday after an EU report suggested that Greece's 2009 deficit was bigger than the government reported. The credit rating agency Moody's downgraded Greece's debt to a lower investment grade, and initiated a further review.

The dollar and commodities: The dollar gained versus the euro on Greece worries. The greenback also rose versus the yen after falling in the morning.

Commodity prices slumped, but were off the worst levels of the day. COMEX gold for June delivery fell $5.90 to settle at $1,142.90 per ounce.

U.S. light crude oil for June delivery rose 2 cents to settle at $83.70 a barrel on the New York Mercantile Exchange.

Company news: CenturyTel (CTL) said it would buy fellow local phone company Qwest Communications (Q, Fortune 500) in a stock swap worth $10.6 billion.

US Airways said it has ended merger talks with United Airlines, owned by UAL Corp. (UAUA, Fortune 500), amid talk that United was considering pursuing a merger with Continental (CAL, Fortune 500).

Starbucks (SBUX, Fortune 500) reported higher quarterly profit that beat estimates and boosted its 2010 outlook late Wednesday. Shares rallied 7.3% Thursday.

Market breadth was positive. On the New York Stock Exchange, winners topped losers by two to one on volume of 1.25 billion shares. On the Nasdaq, advancers beat decliners eight to five on volume of 2.68 billion shares.

Wall Street reform: President Obama made a push for financial reform Thursday, urging industry leaders to "join us, instead of fighting us in this effort."

Speaking at Cooper Union in New York, near Wall Street, Obama addressed an audience of students, union leaders and some of the financial industry's most prominent executives, including Goldman Sachs CEO Lloyd Blankfein.

Last week Goldman Sachs was accused by the Securities and Exchange Commission of defrauding investors in a subprime mortgage deal during the crisis.

Obama's speech occurred as Congress is debating a financial reform package that Democrats say would enable the U.S. to avoid another financial crisis. However, debate has been contentious amid differences of opinion over how to avoid further taxpayer-funded bailouts and ultimately prevent another crisis.

Economy: The National Association of Realtors said existing home sales rose to a 5.35 million unit annual rate in March from a 5.01 million unit rate in February. Economists surveyed by Briefing.com thought sales would rise to 5.29 million units.

The Producer Price Index (PPI), a measure of wholesale inflation, rose 0.7% in March after falling 0.6% in February, due to a big spike in food and fuel costs. Economists thought it would rise 0.5%. Prices excluding food and energy rose 0.1%, in line with forecasts and matching February's rise.

The number of Americans filing new claims for unemployment fell to 456,000 last week from a revised 480,000 in the previous week. Economists thought claims would fall to 450,000.

Continuing claims, a measure of Americans who have been receiving benefits for a week or more, fell to 4,646,000 from 4,686,000 in the previous week. Economists forecast 4,600,000 continuing claims.

World markets: In overseas trading, European markets fell, with London's FTSE down 1%, France's CAC 40 down 1.3% and Germany's DAX down 1%. Asian markets were mixed, with Hong Kong's Hang Seng index down 0.3% and Japan's Nikkei down 1.3%.

Bonds: Treasury prices fell, raising the yield on the 10-year note to 3.77% from 3.74% late Wednesday. Treasury prices and yields move in opposite directions.