Stocks rose on Thursday, with the Dow swinging nearly 200 points from its session low to high and the S&P 500 recovering after hitting a key technical level in volatile trading a day before the release of the U.S. jobs report.
Market volatility has increased recently and the S&P 500 has lost 3 percent since Federal Reserve Chairman Ben Bernanke's comments two weeks ago that the central bank may decide to reduce stimulus in the next few policy meetings if data shows the economy is improving. The move follows a rally for much of this year, largely on the Fed's continued stimulus actions.
Around midday, the S&P 500 briefly slipped below its 50-day moving average of 1,604 - the first time the benchmark has dropped below that technical level since April 18. By mid-afternoon, the S&P reversed course and ended the day up 0.9 percent. The session's best performers included financials .SPSY and health care .SPXHC, with each of those S&P sector indexes ending up 1.4 percent.
Economists expect the non-farm payrolls report on Friday will show job growth of 170,000 in May, slightly above April's addition of 165,000 positions. They expect the U.S. unemployment rate will remain steady at 7.5 percent. The jobs report will come one hour before U.S. stock trading begins on Friday.
When stocks turned lower earlier in Thursday's session, that reflected some concerns by investors that the May reading could be weaker than expected and signal softness in the labor market.
"Technically, the 1,600 level is an important area to hold," said Michael Sheldon, chief market strategist at RDM Financial, in Westport, Connecticut. "It's only natural to have a little bit of a" bounce from that level.
The pickup in market volatility over the past couple of weeks reflects investors' uncertainty over Fed policy, combined with worries about a still sluggish global economy, he said. At one point in the session, the Dow was down more than 100 points. From its session low to the day's high, the Dow's swing covered about 196 points.
"The market is transitioning from a liquidity-driven rally to one based on economic fundamentals," Sheldon said.
The Dow Jones industrial average .DJI rose 80.03 points, or 0.53 percent, to close at 15,040.62. The Standard & Poor's 500 Index .SPX advanced 13.66 points, or 0.85 percent, to finish at 1,622.56. The Nasdaq Composite Index .IXIC gained 22.58 points, or 0.66 percent, to end at 3,424.05.
The S&P 500 is up 13.8 percent so far this year after repeatedly hitting record highs.
American Express (AXP.N) was among the Dow's top gainers, rising 2 percent to $76.24.
Keith Bliss, senior vice president at Cuttone & Co in New York, said the day's gains in the U.S. stock market also came as the dollar fell against the yen and euro. That move was triggered by worries that U.S. jobs data would disappoint and prompt the Fed to keep its stimulus programs intact.
The European Central Bank kept interest rates unchanged on Thursday and left other policy tools untouched after discussing options it could use if the euro zone's economy does not come out of recession later this year. ECB President Mario Draghi said economic conditions did not justify moves such as requiring banks to pay to leave their money with the central bank overnight.
Retail stocks rose, with major U.S. chains reporting monthly sales that were largely in line with expectations. Shares of Costco Wholesale Corp (COST.O) rose 1.8 percent to $111.09, while the S&P retail index .SPXRT shot up 1.2 percent.
Volume was roughly 6.9 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, above the average daily closing volume of about 6.4 billion this year.
Advancers outnumbered decliners on the NYSE by nearly 4 to 1 and on the Nasdaq by a ratio of more than 2 to 1.