NEW YORK ( TheStreet) -- Stocks rebounded in late trades to finish in positive territory Thursday after Federal Reserve Chairman Ben Bernanke shrugged off concerns on inflation, indicating that the central bank will continue its quantitative easing policy.

The Dow Jones Industrial Average rose by 20 points, or 0.2% to close at 12,062 after trading in a narrow band for most of the trading session. The S&P 500 was higher by 3 points, or 0.2%, at 1307, while the Nasdaq finished ahead by 4 points, or 0.1%, at 2754.

Speaking to reporters at the National Press Club, Fed Chairman Ben Bernanke said recent economic data suggests that "a self-sustaining recovery in consumer and business spending may be taking hold" and said he expects the economy to grow at a faster pace in 2011. Bernanke minimized inflation pressures, which he said, in addition to a still-high unemployment rate, continues to justify the Fed's accommodative monetary policy and asset purchase program.
Fed Chairman Ben Bernanke speaks at the National Press Club on Feb. 3.

He also refuted claims that the Fed's easy monetary policy was responsible for food inflation in emerging markets.

His comments help offset concerns on the antigovernment protests in Egypt which took a more violent turn in Cairo Thursday, spurring fresh uncertainty among global investors and sending oil prices to highs not seen since 2008 earlier in the session. The March crude oil contract, however, shed 32 cents to settle at $90.54 a barrel.

Cisco ( CSCO), Bank of America ( BAC) and Pfizer ( PFE) outperformed on the Dow, while Merck ( MRK), Microsoft ( MSFT) and Coca-Cola ( KO) were laggards.

Thursday saw more promising economic data. Activity within the services sector strengthened in January. The Institute for Supply Management's non-manufacturing index rose to 59.4, compared with the reading of 57 that economists had been expecting and December's level of 57.1.

Initial jobless claims fell by 42,000 to 415,000, from 457,000 in the week ended Jan. 29. That was better than the decline of 29,000 that economists had expected with a claims target of 425,000, from the prior week's previously reported level of 454,000.

The initial claims data is particularly important ahead of Friday's January jobs report from the Labor Department. According to, economists anticipate a 148,000 increase to nonfarm payrolls and a 163,000 increase in private payrolls. The unemployment rate is projected to tick up to 9.5%, from 9.4%, previously. On Wednesday, Automatic Data Processing said companies added 187,000 jobs in January, exceeding expectations for job growth of 145,000.

"U.S. equity markets are jittery despite the good economic data," said PNC chief economist Stuart Hoffman, pointing to the ISM's manufacturing index, which soared to its highest level since May 2004 on Tuesday, and Thursday's strong services sector reading.

"The ISM non-manufacturing index increased to 59.4, evidence that the economic recovery is broadening beyond manufacturing," Hoffman said in a recent note.

Earlier, factory orders rose by 0.2% in December, surprising economists that had expected a decline of 0.6%. That compares to growth of 1.3% in November, which was upwardly revised from an initially reported gain of 0.7%.

Nonfarm productivity rose 2.6% in the fourth-quarter, according to the Labor Department's preliminary reading, which was stronger than the increase of 2.2% that Wall Street projected. The rise compares with growth of 2.3% in the third quarter. Unit labor costs slipped 0.6%, disappointing expectations for an uptick of 0.1%. In the third quarter, unit labor costs declined 0.1%.

Breadth turned positive in the final hour of the session with 51% of shares trading on the New York Stock Exchange advancing and 46% of stocks declining.

There were 721 million shares trading on the NYSE and 1.5 billion changing hands on the Nasdaq.

Estee Lauder ( EL), Harman International ( HAR) and Autonation ( AN) were top gainers on the S&P 500, while Ameriprise Financial ( AMP) and CVS Caremark ( CVS) were prominent losers.

Shares of Merck fell 2.7% to $32.90 after the company swung to a loss in the fourth-quarter from purchase accounting adjustments, restructuring and merger-related costs. Adjusted earnings of 88 cents a share, however, topped analysts' estimates by 5 cents.

Fronteer Gold ( FRG) soared 38.7% at $14.43 on news that it will be acquired by Newmont Mining ( NEM). The two miners reached an agreement under which Newmont will acquire all of Fronteer Gold's outstanding common shares and Fronteer shareholders will receive 14 Canadian dollars in cash and one share in a new company for each Fronteer share. Newmont's stock gained 3% to $57.33.

Shares of BJ's Wholesale Club ( BJ) soared 12% to $48.25 on news that the retailer is exploring and evaluating strategic alternatives, including a possible sale.

Shares of Yum! Brands ( YUM) were up 3% at $49.23 after the quick service restaurant operator beat expectations late Wednesday. The company cited strong sales in China and other emerging markets.

Royal Dutch Shell ( RDS.A) reported a spike in fourth-quarter earnings but its adjusted profit of $4.1 billion missed expectations. Analysts had been projecting earnings of $4.85 billion. The stock shed 2.9% at $71.25.

After the bell, Las Vegas Sands ( LVS) reported fourth-quarter results that beat profit expectations but missed on revenues. Shares were shedding 5.5% to $47.49 in extended trading.

Elsewhere in commodity markets, the most actively traded April gold contract rose $20.9 to settle at $1,353 an ounce.

The dollar strengthened against a basket of currencies, with the dollar index up by 0.8%. The benchmark 10-year Treasury fell 18/32, lifting the yield to 3.549%.


Japan's Nikkei declined 0.3% and the Hong Kong Stock Exchange was closed for the Lunar New Year. London's FTSE lost 0.3% while the DAX in Frankfurt added 0.1%.

--Written by Melinda Peer and Shanthi Bharatwaj in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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