Stocks Continue Rally on Retail Data

"I think what investors are looking for is just some evidence that the economy is possibly moving forward, or at the very least not going into an extended or an accelerated downturn," Zaro said. "They're looking for some thread to say that consumers are hanging in there."

That, said Peter Morici, a business professor with the University of Maryland and former director of economics at the U.S. International Trade Commission, is precisely what makes tomorrow's jobs report so monumentally important.

"Job losses," he wrote in a Forbes column today, "are pushing down household disposable income and consumer spending, and that might send second-quarter GDP growth into negative territory."

"If payroll jobs decline for a fifth straight month in May," he warned, "it will be hard to deny that the economy is in a modern recession, a period of malaise and protracted angst -- lethargic growth interrupted by periods of contraction -- of difficult-to-predict duration."

Crude oil let some of the air out of equities Thursday as futures rocketed $5.22 to $127.52 a barrel, intensifying what were already fairly strong gains earlier in the day. Also, gas at the pump is now only a penny away from the $4 mark, with the national average reaching a new record of $3.989 a gallon.

Gold futures dropped $8.30 to $875.50 an ounce. The U.S. dollar weakened by 0.9% against the euro at $1.5592, but climbed by 0.6% against the yen to fetch 105.62.

On the corporate front, Verizon more than recovered from a loss in the prior session after confirming it will buy Alltel for $28.1 billion via its Verizon Wireless joint venture with Vodafone (VOD Quote), a pact that will make it the largest U.S. mobile carrier. The deal, news of which broke yesterday, comes just months after Alltel was taken private by TPG Capital and Goldman Sachs (GS Quote). Verizon shares were up 4.3% at $38.56.