Dow Edges Ahead, but Nasdaq Eases

Updated from 4:20 p.m. EDT

Blue-chip stocks closed higher Thursday, overcoming a surge in crude oil, drab economic data and a weakening dollar, but the Nasdaq trailed the other major averages and finished the session slightly negative.

The Dow Jones Industrial Average climbed 12.78 points, or 0.1%, to 11,430.21, and the S&P 500 was up 3.18 points, or 0.3%, at 1277.72. The Nasdaq lost 8.7 points, or 0.4%, to 2380.38.

With the new day came renewed worry over the fate of the battered financials. After falling as much as 17% right out of the gate, Fannie Mae (FNM Quote) reversed course and rose 10% to $4.85. Freddie Mac (FRE Quote) pared a 22% early drop to a 2.8% decline at $3.18. Lehman Brothers (LEH Quote) shares were down 0.1% to $13.72.

Following Goldman Sachs' slashed earnings forecast for five major financial firms just a day ago, Citigroup lowered its estimates on Goldman Sachs (GS Quote), Lehman and Morgan Stanley (MS Quote). Citi predicted further writedowns for the big Wall Street firms as they continue to navigate the credit crisis. Goldman slipped 1.2% to $156.42, and Morgan Stanley fell 0.9% to $37.06.

Bill Stone, chief investment strategist for PNC Wealth Management, said rumors that Lehman is attempting to sell some of its businesses and difficulties assessing the value of Fannie and Freddie's equity pressured the financials slightly. However, a spike in oil prices, a weaker dollar and unimpressive economic data probably provided more pressure on stocks, he said.

In the realm of commodities, oil prices were one of the stories of the day, as near-term futures bolted up $5.62 to settle at $121.18 a barrel. Gold jumped $22.70 to finish at $839.