NEW YORK ( TheStreet) -- Stocks finished mixed after reports of the approval of Greece's austerity measures helped pare steep losses that were triggered by a surprise announcement on tapping oil reserves .

The Dow Jones Industrial Average finished down 60 points, or 0.5%, to 12,050. The S&P 500 ended lower by 4 points, or 0.3%, at 1284, and the Nasdaq reversed course to gain 18 points, or 0.7%, at 2687.

Greece's austerity plan has won support from European Union and International Monetary Fund officials, according to a Reuters report. A draft of how the debt-laden coutry will hike taxes and cut spending, however, still needs approval from Greek parliament.

A frantic sell-off from the morning proved a strong drag on the market, leaving two out of three indexes in the red. The International Energy Agency said that the U.S. and other nations would release 60 million barrels of oil in the coming months to help offset oil supply disruptions in Libya. Energy stocks fell more than 2% as the August crude oil contract shed $4.25 to trade at $91.16 a barrel.

"A move down in energy prices is what this economy needs," said Mike Feroli, an economist at JP Morgan Economics. Feroli added that the news from Greece was marginal and that a bigger test will be whether the austerity measures will indeed be passed and implemented.

The stock market got off to a weak start after the Federal Reserve cut its projected gross domestic product growth forecast for 2011. Uncertainty amongst investors heightened on Wednesday after Fed Chairman Ben Bernanke suggested that the recent slowdown could stem in part to longer-term factors in addition to transitory issues.

"This is all concern about the U.S. economy," said Jay Suskind, senior vice president at Duncan Williams. "Bernanke seemed almost desperate... he didn't have a lot of answers and basically said he has no idea exactly what's causing the economic slowdown."

Suskind said that the realization of a stagflation is growing stronger. "We're headed for slow to no growth and higher prices."

As investors sold risky assets and took safe haven in the dollar, commodities took a significant hit. The euro weakened 0.7% against the greenback, which finished up 0.5% on the dollar index. Gold for August delivery shed $32.90 to close at $1,520.50 an ounce at the Comex division of the New York Mercantile Exchange.

A surprise surge in jobless claims confirmed the Fed's grim outlook. The Labor Department reported a 9,000 rise in initial jobless claims to 429,000 in the week ended June 18 , and revised the prior week's number upward to 420,000 claims from 414,000.

A drop in new homes sales served as yet another reminder of the lagging economy. Sales ticked down 2.1% in May to an annual rate of 319,000. Consensus estimate was a drop down to 305,000 sales, according to Briefing.com.

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