Stocks Fight to Higher Close

The market overcomes a jump in crude prices.
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Updated from 4:13 p.m. EDT

Stocks had an erratic session but finished higher Thursday as end-of-quarter buying combined with a better-than-expected report on the U.S. economy to overcome a surge in crude oil prices.

The

Dow Jones Industrial Average

traded in a range of 114 points before closing ahead by 48.39 points, or 0.39%, to 12,348.75. The

S&P 500

gained 5.30 points, or 0.37%, at 1422.53. The

Nasdaq Composite

fell as many as 20 points earlier before ending with a gain of 0.78 point, or 0.03%, at 2417.88.

About 2.86 billion shares changed hands on the

New York Stock Exchange

, where advancers beat decliners by a 5-to-3 margin. Volume on the Nasdaq reached 1.94 billion shares, with losers matching winners.

"We were weak for part of the day, as trading activity was weak throughout much of the day," said Michael Sheldon, chief market strategist with Spencer Clarke LLC. "The most impressive thing about the session is that equity prices could finish with gains despite the fact that oil prices were at a six-month high."

A jump in crude, stemming from the situation involving Iran holding a group of British sailors hostage, pressured the indices but failed to hold them to a negative close. Iran recently said the release of the lone female British captive will be delayed.

Oil for May delivery, which has added more than 3% already this week, surged another $1.95 to $66.03 a barrel on the Nymex.

Before the session began, new government data showed that the domestic economy grew at a stronger rate during the fourth quarter than previously reported. The Commerce Department said gross domestic product rose 2.5% last quarter, up from the preliminary reading of a 2.2% annual pace.

Economists expected no change to the last reading. The year-over-year change in inflation was unrevised at 2.2%, remaining a bit outside the

Federal Reserve's

comfort zone.

The GDP report is the last of three released on the fourth quarter.

Wall Street has been edge for most of this week, and on Wednesday the market ended in the red as soft economic data, climbing crude and unsettling remarks about inflation from Fed Chairman Ben Bernanke conspired to hit stocks.

The Dow fell 96.93 points, or 0.78%, to 12,300.36, and the S&P 500 gave up 12.38 points, or 0.87%, to 1417.23. The Nasdaq lost 20.33 points, or 0.83%, to 2417.10.

"Yesterday we saw a realignment of the Fed expectations," said Paul Mendelsohn, chief investment officer with Windham Financial. "We had gone overboard expecting a cut, and now it's clear that inflation is Bernanke's main issue. Today, though, we're seeing strength in areas where we were weaker yesterday."

By market subsector, the Philadelphia/KBW Bank Sector Index finished with a 0.9% increase, the Amex Oil Index added 0.8%, and the S&P Retail Index was higher by 0.3%.

Elsewhere on the economic docket, the Labor Department said initial jobless claims fell by 10,000 to 308,000 last week. The less-volatile four-week moving average dropped by 7,250 claims to 316,750.

Treasury prices remained near the unchanged mark. The 10-year note was down 3/32, yielding 4.63%, and the 30-year bond was up 2/32, yielding 4.84%. The dollar was advancing against the world's major currencies.

On the corporate side,

CarMax

(KMX) - Get Report

missed estimates for the latest quarter but offered a profit forecast for fiscal 2008 that would meet analysts' targets. The stock lost $2.36, or 8.7%, at $24.71.

Elsewhere, a published report says the U.K.'s Barclays has hired

Citigroup

(C) - Get Report

to help it explore its bid for

ABN Amro

(ABN)

of the Netherlands. Citigroup gained 0.9% to $51.40, and ABN finished with a gain of 0.8% at $43.

Back in the U.S., chip giant

Intel

(INTC) - Get Report

reached a deal to settle a tax flap with the IRS, a move that will cut its current quarter tax provision by nearly $300 million and lower its tax rate for this year below its prior forecast. Intel tacked on 23 cents, or 1.2%, at $19.09.

U.S. Steel

(X) - Get Report

made M&A headlines after the company said it will acquire

Lone Star Technologies

(LSS)

in a cash deal worth $2.1 billion, or $67.50 a share.

U.S. Steel climbed $3.61, or 3.7%, to $101.22. Lone Star soared $17.66, or 36.5%, to $66.11.

Among analyst actions, UBS downgraded

UnitedHealth

(UNH) - Get Report

to neutral from buy, while JPMorgan raised its rating for

Freeport-McMoRan

(FCX) - Get Report

to overweight from neutral. UnitedHealth lost 3.5% to close at $52.84, but Freeport rose 1.8% to $65.35.

Global stocks were stronger. Overnight in Asia, Tokyo's Nikkei edged ahead to 17,264, and Hong Kong's Hang Seng jumped 1.4% to 19,822. London's FTSE 100 was up 0.9% to 6324, and Frankfurt's Xetra DAX and the Paris Cac 40 posted gains of more than 1%.