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

Weak readings on separate purchasing managers' surveys for China and the eurozone also put a damper on the market. On Thursday, European Central Bank President Jean-Claude Trichet rated risks to financial stability in the eurozone as "red," according to a Bloomberg report.

The FTSE in London declined 1.7%, and the DAX in Frankfurt lost 1.8%. Hong Kong's Hang Seng shed 0.4%, and Japan's Nikkei lost 0.3%.

The benchmark 10-year Treasury rose 14/32, diluting the yield to 2.923%.

20 out of 30 Dow components finished in the negative. Chevron ( CVX), Coca-Cola ( KO) and Exxon Mobil ( XOM) dragged down the Dow. Pfizer ( PFE) and Home Depot ( HD) traded at the top of the Dow.

Market breadth was decidedly to the negative, with 83% of the 4.2 billion shares that traded on the New York Stock Exchange losing ground and only 62% strengthening. 1.9 billion shares changed hands on the Nasdaq.

In corporate news, ConAgra Foods ( CAG) fell short of Wall Street's estimates with a fourth-quarter profit of 47 cents a share. The consumer and commercial foods company blamed higher input costs. Shares slipped 0.2% to $25.37.

Rite Aid ( RAD) narrowed its loss in the first quarter to 7 cents a share compared with analysts' forecasts for a loss of 12 cents a share. Sales remained flat at $6.39 billion, which was slightly ahead of expectations for sales of $6.37 billion. The retail drugstore chain's stock gained 6% to $1.17.

Shares of Bristol Myers Squibb ( BMY) gained 6% to $29.33 and shares of Pfizer ( PFE) added 2% to $20.65 after the companies revealed favorable results for a blood-thinning drug that they are co-developing.

Software company Red Hat ( RHT) saw a 4% pop to $45.27 after solidly beating analysts' expectations late Wednesday on strong subscription revenue and operating margins.

Homebuilder Lennar ( LEN) reported a 65% plunge in second-quarter earnings, which fell to 7 cents a share on sales of $764.5 million. Analysts had been anticipating earnings of 4 cents a share on sales of $646.4 million. Second-quarter new orders rose 41% from the first quarter but were flat from a year earlier because of the homebuyer's tax credit. Lennar's stock ticked up 2% to $18.51.

Japanese automaker Nissan ( NSANY) said it expects a 15% drop in earnings for the current fiscal year because of the stronger yen and production disruptions from the March 11 earthquake and tsunami.

It's hard to see where momentum is going to come from going forward," said Matthew Smith, chief investment officer at Smith Affiliated Capital. "Bellwethers like UPS and FedEx haven't performed well and overall corporate earnings have not been good either."

As the markets head to the end of the quarter, Smith says it will be hard to figure out the direction of stocks. "You'll get a lot of funny money with portfolio managers taking profit so you have to wait until the first week of July to reassess things," said Smith.


-- Written by Chao Deng and Melinda Peer in New York.

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