Nasdaq Storms Back to Finish Higher - TheStreet

Updated from 4:09 p.m.

Blue-chips ended near the flatline Thursday, and tech stocks finished higher, as the major averages staged a big comeback from a selloff earlier in the session.

The

Dow Jones Industrial Average closed with a loss of 11.97 points, or 0.1%, to 8801.53. The

Nasdaq added 28.42 points, or 2.1%, at 1374.43, and the

S&P 500 rose 6.90 points, or 0.8%, to 927.37. The Dow had been down more than 200 points around midday, and the Nasdaq went as low as 1323.

Some attributed the snapback to word that Morgan Stanley strategist Barton Biggs raised the equity allocation in his model portfolio. Biggs reportedly said it's a good time to start buying stocks amid signs of capitulation among investors.

A slew of corporate news, including word of another accounting investigation and positive retail sales numbers, had the market swinging in a wide range.

Dow component

Eastman Kodak

(EK)

provided an early glimmer of hope, raising its second-quarter earnings forecast and saying a restructuring effort is beginning to pay dividends.

The company, which has axed thousands of employees in the face of tough competition and lukewarm demand for its products, now sees second-quarter earnings of 85 cents a share, well ahead of the consensus estimate of 63 cents. The stock climbed 11% to $29.58.

More questions are being raised about corporate accounting practices, this time at

Bristol-Myers Squibb

(BMY) - Get Report

. The drugmaker is being investigated by U.S. regulators for allegedly inflating sales by $1 billion last year, according to the

Financial Times

.

The company confirmed the probe, and said it's cooperating with the

Securities and Exchange Commission

. Bristol-Myers shares fell 4.5% to $22.11 on the news.

Earlier this week, big pharmaceutical company

Merck

(MRK) - Get Report

was troubled by questions about its revenue-recognition practices.

Analysts at UBS Warburg lowered their investment rating on

General Motors

(GM) - Get Report

, the world's largest automaker, to hold from buy citing potential risks from its U.S. pension liabilities. Banc of America also downgraded the stock. Shares of GM were down earlier, but they rallied along with the rest of the market to close up 0.2% at $47.72.

Internet bellwether

Yahoo!

(YHOO)

on Wednesday said second-quarter earnings rose on higher revenue. The company's results beat analysts' expectations and marked the first time in six quarters Yahoo! recorded a profit. The stock was nevertheless downgraded Thursday by Merrill Lynch on a valuation basis. It rose 6% to $12.92 by the close.

The software sector continues to struggle, and

Oracle

(ORCL) - Get Report

said after the close Wednesday that demand is showing no signs of improvement. The company did reaffirm guidance for the full year, calling for a profit of 7 cents a share, which pushed its stock up 5% to $9.42.

Meanwhile,

Network Associates

(NET) - Get Report

, a maker of Internet security software, reported a second-quarter profit, excluding its

McAfee.com

(MCAF)

subsidiary, citing strong demand for its antivirus software. But the company offered disappointing guidance, and investors sent the stock down 18% to $14.45.

Another security software company,

VeriSign

(VRSN) - Get Report

, warned after the close Wednesday that it wouldn't meet its second-quarter revenue and earnings targets due to the continued slowdown in technology spending. Shares of VeriSign still rose 19% to $5.94.

A host of retail companies posted solid same-store sales numbers for June.

Wal-Mart

(WMT) - Get Report

, the world's largest retailer, said same-store sales came in better than expected, rising 7.9%, prompting the company to raise its second-quarter and full-year earnings forecast. Its shares climbed 0.8% to $54.18.

Jewelry and women's accessories merchant

Claire's Stores

(CLE)

said sales at stores open at least a year rose 5% on annualized basis. The company also said it remains comfortable with its previous earnings guidance of 23 cents a share.

Home furnishings retailer

Pier 1 Imports

(PIR) - Get Report

said June sales rose 7.4% and reaffirmed its second-quarter outlook as well.

Costco

(COST) - Get Report

said its sales rose 6%.

On the economic front, the Labor Department said

initial jobless claims for the week ended July 6 rose to 403,000 from 387,000 the previous week. Economists were expecting the number of first-time jobless insurance claims to come in at 390,000.

Separately, the department said the

producer price index, which measures wholesale prices of goods at all three stages of production, rose 0.1% in June, reversing a 0.4% decline in May. Excluding the volatile food and energy components, the index showed a 0.2% increase. The results were slightly higher than expected.

U.S. Treasuries were lower around 4 p.m. EDT. The 10-year note was down 4/32 to 101 27/32, yielding 4.63%. The long bond was off 14/32 at 100 2/32, to yield 5.369%.

Overseas markets were weaker, as London's FTSE 100 lost 4.3% to 4230 and Germany's Xetra DAX was down 1.7% to 4119. Japan's Nikkei 225 closed down 2.5% at 10,486, while Hong Kong's Hang Seng lost 2.1% to 10,559.