NEW YORK (TheStreet) -- Rising momentum for stocks on Thursday all but erased the punishing losses sustained over Wednesday's session. The S&P 500 spiked 1.3% as retail sales increased at a faster-than-expected rate.
Benchmark indices had suffered three straight days of losses, weighed down by the energy sector as commodity prices crashed.
The Dow Jones Industrial Average added 1% on Thursday and the Nasdaq popped 1.5%.
Overall retail sales climbed 0.7% in November, its largest gain since March, compared to forecasts for a 0.4% increase. Core retail sales, excluding automobiles, gasoline and food services, rose 0.6%.
Increased consumer spending in November validated what economists assured traders would happen since a crash in crude oil sparked broad market selloffs: lower gasoline prices would fuel consumer confidence to spend, a more important measure of economic health given consumer spending contributes more than two-thirds of GDP.
"If there were any doubts about the U.S. consumer, November retail sales have put those to rest," Wells Fargo senior economist Eugenio Aleman wrote in a note. "The decrease in gasoline prices over the past several months continues to be a bounty for consumers ... October and November retail sales numbers are a confirmation of what it is going to be, perhaps, a very good end of the year."
Weekly jobless claims slipped to 294,000, slightly lower than an estimated 295,000 claims. The weekly measure fuels further confidence in a tightening job market after nonfarm payrolls for last month came in at a three-year high with 321,000 U.S. jobs added.
Crude oil prices were barely holding above $60 a barrel. West Texas Intermediate slipped 0.67% to $60.53 after plunging 5% on Wednesday after OPEC cut its demand forecast for 2015.
Walgreen (WAG) shares advanced 5.2% after CEO Greg Wasson announced his retirement, effective once the company's merger with Alliance Boots is completed.
Restoration Hardware (RH) popped nearly 14% as comparable brand revenue increased 22% in its third quarter. Management issued fourth-quarter earnings guidance as expected.
Staples (SPLS) and Office Depot (ODP) were spiking after activist investor Starboard Value substantially raised its stake in both, a move which could put pressure on the companies to merger, The Wall Street Journal reported.
Lululemon (LULU) added 9.5% after beating third-quarter earnings estimates, though gains were restricted as operating margins were pressured. Urban Outfitters (URBN) climbed 11% following a Securities and Exchange Commission filing in which the retailer disclosed fourth-quarter comparable sales in the low-single digits after a negative result in its third quarter.
RadioShack (RSH) fell 3.6% as comparable-store sales tumbled 13%, though quarterly operating losses were narrower than a year earlier. HD Supply (HDS) shares were down 1% after announcing private-equity shareholders would be unloading almost 41 million shares in a secondary offering.
-- Written by Keris Alison Lahiff in New York.