Stocks Rise Again

Updated from 4:37 p.m. EDT

Stocks in New York closed below their best levels Thursday, but still finished in the green for the third straight time in this holiday-shortened week as oil prices once again recoiled.

The Dow Jones Industrial Average had a choppy morning, then surged by as many as 133 points before backpedaling to end up 52 points, or 0.4%, at 12,646. The S&P 500 added 7 points, or 0.5%, to 1398, and the Nasdaq Composite climbed 22 points, or 0.9%, at 2508.

Neil Hennessy, president and portfolio manager with Hennessy Funds, blamed pure emotion for many of the erratic moves early on. "Everybody is trying to figure out where it's going just simply on their gut feelings on a daily basis," he said.

The session saw crude oil deepening its early losses after the government said last week's crude stockpiles had dwindled by 8.8 million barrels. Futures plunged $4.41 to $126.62 a barrel.

"Oil is starting to crack," Hennessy said. "Somebody at some point is going to say, 'Enough is enough.'" He compared oil to housing and technology, two particularly recent examples of boom-and-bust markets. "History is interesting, because it tends to repeat itself," he said.

But Bill Fleckenstein, president of Fleckenstein Capital Management, doesn't believe the "predictable" retreat in oil, following last week's excruciatingly high level of $135, can prop up stocks for very long. Away from that, he said, the yield on the 10-year government bond has climbed to a peak for the year, and the economy continues to weaken in conjunction with worsening inflation.