Bulls Hack Out of a Thicket

Thursday brought a mix of economic signs -- some strong little crocuses sprouting after spring's first defrost. But, there are some suprime weeds growing in this garden, and its future is uncertain.

Not only are there big down days in the stock market, like Tuesday's, intermixed with smaller up days like Wednesday's and Thursday's, but there are no clear or lasting sector rotations. The rallies and the selloffs are broad-based. Volatility remains unleashed, but sentiment is no longer at extremes. And the major indices fluctuate back and forth over the neutral line throughout single trading days as they did Thursday.

On the macroeconomic front, with subprime-spillover concerns battling for attention with higher inflation readings like Thursday's producer price index, traders admit they're not sure where the spinning top will fall.

That's especially true on a day like Thursday, when the private-equity bidding wars continued, copper broke out, and cyclically sensitive parts of the market gained ground. Indeed, the markets ran counter to the soft manufacturing that the weak regional Philly Fed and New York Empire State surveys belie.

The Dow Jones Industrial Average gained 0.2% Thursday to close at 12,159.68, while the S&P 500 finished up 0.4% to close at 1392.28. The Nasdaq Composite ended the day up 0.3 to close at 2378.70.

"People really don't know exactly what is going on in the economy," says Randy Diamond, trader at Miller Tabak. Thursday's lower report of initial jobless claims for the week fuels the bulls who say all is well as long as the job market remains intact, he says. But "people are also seeing the stickiness in inflation," he says.