Blue Chips, Bonds Bounce; Oil Dips - TheStreet

Updated from 4:06 p.m. EST

Blue-chip stocks and bonds staged a modest rebound Thursday, erasing some of Wednesday's inflation-related rout with the help of sinking oil prices.

The

Dow Jones Industrial Average

closed higher by 45.89 points, or 0.4%, at 10,851.51 -- snapping a three-day skid, and leaving it just 90 points below the near-four-year high set last Friday -- while the

S&P 500

added 2.24 points, or 0.2%, to 1209.25. Both indices fell about 1% Wednesday. The

Nasdaq

lost 1.57 points, or 0.08%, to 2059.72, having traded as many as 19 points lower during the session.

Closing volume on the

New York Stock Exchange

was 1.60 billion shares, with decliners beating advancers 10-to-7. Volume on the Nasdaq was 1.80 billion shares, with decliners beating advancers 3-to-2.

The Nasdaq had pulled even after

National Semiconductor

(NSM)

posted third-quarter earnings of $77.4 million, or 21 cents a share, on sales of $449.2 million. Analysts had been expecting 16 cents a share on $444 million. Shares rose $1.13, or 5.6%, to finish at $21.12. The Philadelphia semiconductor index, of which National Semiconductor is a component, gained 1.4% Thursday.

In other markets, the 10-year Treasury note, which has fallen well over a point in price since Monday, gained 13/32, with the yield down to 4.47%. The yield hit a seven-month high yesterday. The dollar was weaker across the board after Prime Minster Junichiro Koizumi said that Japan "in general" must consider diversifying its reserves, according to

Bloomberg

.

Oil eased after briefly jumping to all-time highs Wednesday in Nymex trading. The April crude contract finished down $1.23 to $53.54 a barrel.

"Lower oil had an effect on stocks today, as the market looks like it went on a roller coaster today," said Michael Sheldon, chief investment strategist with Spencer Clarke LLC. "The stock market bounced back after a 2% decline in oil. With oil closing at the level it did, it looks like the near-term direction of oil is now most likely down, which could provide a lift over the next few days. The sharp uptrend may be broken, which would be a positive for equity prices. With all this uncertainty regarding commodities, investors are gun-shy to start chasing."

"It's almost a reverse of yesterday, when the Dow was the weakest," said Paul Nolte, director of investment at Hinsdale Associates. "The market is trying to grapple with a higher interest rate and higher oil environment and find out where the ceiling is on both of them. "

Lower crude prices weighed on energy stocks Thursday. Other weak sectors included materials and homebuilding. Strengthening sectors included semiconductors, drugs, health care and biotech.

Trading Thursday occurred in the shadow of

Intel's

(INTC) - Get Report

midquarter update, Intel raised its first-quarter revenue guidance, saying it now expects sales of $9.2 billion to $9.4 billion. The previous low end of that range was $8.8 billion. Analysts expect revenue of $9.15 billion and EPS of 28 cents. Shares added 57 cents, or 2.3%, to $25.42 in after-hours trading. Shares gained a penny in regular trading.

Shares of

Altera

(ALTR) - Get Report

received a boost Thursday after the company raised its estimate of first-quarter sales Wednesday night to $254.3 million from its previous range of $242.3 million to $247.1 million. The move came one day after rival

Xilinx

(XLNX) - Get Report

also boosted guidance. Brokerage J.P. Morgan raised its rating for Altera to overweight from neutral on the basis of the company's guidance. Shares added 27 cents, or 1.3%, to $20.64.

A New York hedge fund has reportedly joined two other companies in bidding $23.25 a share to take over

Toys R Us

(TOY)

, which until now had been trying to split off its retail toy business. According to

The Wall Street Journal

, the bid from Cerberus Capital,

Goldman Sachs

(GS) - Get Report

and

Kimco Realty

(KIM) - Get Report

is worth about $5 billion total. Toys R Us gained 62 cents, or 2.7%, to close at $23.67.

Urban Outfitters'

(URBN) - Get Report

fourth-quarter earnings surged 72% from a year ago to $31.7 million, or 38 cents a share, beating estimates by 2 cents. Revenue rose 43% from a year ago to $251.6 million, also above estimates. However, the company expressed cautious optimism about spring. Urban Outfitters lost 28 cents, or 0.6%, to $47.24.

Delta Air Lines

(DAL) - Get Report

fell 11.4% after it said in a

Securities and Exchange Commission

filing that it expects a "substantial net loss" this year. The airline warned that cash flow from its operations won't be enough to meet liquidity needs, blaming lower margins and higher fuel prices. Shares were off 56 cents to finish at $4.33.

After the bell Wednesday,

Biogen Idec

(BIIB) - Get Report

said its chief counsel, Thomas Bucknum, had resigned effective immediately after regulatory filings showed that he had sold Biogen shares just before the company announced it was suspending sales of its new multiple sclerosis drug, Tysabri. Shares were lower by 70 cents, or 1.8%, to $38.61.

Meanwhile,

Elan

(ELN)

, Biogen's Tysabri partner, was down 5.2% Thursday. Elan shares had lost almost 70% last week after the drug was pulled due to safety concerns. Shares fell 41 cents to $7.47.

Retailer

Claire's Stores

(CLE)

posted fourth-quarter earnings of $55.5 million, or 56 cents a share, from $52.0 million, or 56 cents a share, a year ago. Excluding items, earnings totaled 59 cents a share, matching the Thomson First Call average earnings estimate. Net sales rose to $395.9 million from $364 million a year earlier. Looking ahead, the company expects first-quarter EPS of between 25 cents and 28 cents, lower than analysts' expectations of 30 cents. Claire's rose 54 cents, or 2.4%, to $23.

Imax

(IMAX) - Get Report

reported fourth-quarter net income of $7.8 million, or 19 cents a share, compared with a loss of $507,000, or 1 cent a share, in the year-ago quarter. Revenue rose to $47.5 million from $29.9 million on increasing demand for the installation of the company's giant movie screens. The Thomson First Call average earnings estimate called for a profit of 18 cents a share. Imax also raised its 2005 earnings outlook to a range of 35 cents to 38 cents a share, above analysts' forecasts of 33 cents a share. Shares added 55 cents, or 5.4%, to $10.64.

Children's Place

(PLCE) - Get Report

reported fourth-quarter net income of $24 million, or 85 cents a share, compared with $15.2 million, or 55 cents a share, a year ago. Excluding items, earnings were 95 cents a share. Revenue rose to $462.1 million, a 97% increase year over year, rising in part due to the acquisition of Disney Store North America. Analysts had expected earnings of 86 cents a share on revenue of $462 million, according to Thomson First Call. Shares gained 58 cents, or 1.4%, to $43.40.

In brokerage action, Deutsche Securities upgraded

Motorola

(MOT)

to buy from hold, and set a stock price target of $18, on a positive outlook for the company's handset lineup. Shares rose 13 cents, or 0.9%, to $15.42.

On the economic front Thursday, the Labor Department said initial jobless claims for the week ended March 5 rose 17,000 to 327,000. Economists had expected 310,000 new claims, matching last week's figure.

In other economic news, the Treasury Department said that the U.S. government ran a budget deficit of $113.9 billion in February, a record for the month. Last February, the deficit was $96.7 billion.

On Friday, the Commerce Department will report January's trade balance. The consensus forecast is for a deficit of $56.8 billion, vs. $56.4 billion in the previous month.

Overseas markets finished lower after Wednesday's 107-point dive on the Dow. In Europe, London's FTSE 100 was off 0.7% to 4962, while Germany's Xetra DAX lost 0.9% to 4337. In Asia, Japan's Nikkei fell 0.9% overnight to 11,865, while Hong Kong's Hang Seng lost 0.6% to 13,856.