Stocks rebound from sharp sell-off; Philadelphia-area manufacturing reading boosts confidence

NEW YORK — Wall Street capped a volatile week with a big advance Thursday, rebounding from a steep sell-off as investors sought bargains and cheered a milder-than-expected drop in a regional manufacturing report.

The Dow Jones industrial average rose about 260 points Thursday, giving the blue chips a gain of more than 3 percent for the week, while broader indexes finished the week with gains of 2 percent to 3 percent. The markets are closed for Good Friday.

Besides the manufacturing reading from the Philadelphia Federal Reserve, a plunge in commodities prices gave investors some hope that lower energy and food prices might boost consumers' discretionary spending and ease inflation concerns. Crude oil fell, while gold prices declined sharply.

Stocks had wobbled in the early going Thursday after the Labor Department said the number of newly laid off workers filing for unemployment benefits rose last week by a more-than-anticipated 22,000 to 378,000. That level is the highest in nearly two months.

But Wall Street found reason to buy back into stocks when the Philadelphia Fed said manufacturing activity is dropping in March by less than it did in February, and by less than many economists anticipated.

Investors appeared relieved about the report, but economic jitters are far from alleviated. On top of the disappointing jobless claims report, the Conference Board said Thursday that its index of leading economic indicators fell, as expected, for the fifth straight month in February.

The markets are apt to stay volatile for some time, as investors digest news on the economy and the troubled financial sector.

"It's the every-other-day theory — up one day, and down the next," said Scott Brown, chief economist at Raymond James & Associates.

According to preliminary calculations, the Dow rose 261.66, or 2.16 percent, to 12,361.32.

Broader stock indicators also advanced. The Standard & Poor's 500 index rose 31.09, or 2.39 percent, to 1,329.51, and the Nasdaq composite index rose 48.15, or 2.18 percent, to 2,258.11.

Bond prices rose Thursday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.34 percent from 3.41 percent late Wednesday.

Light, sweet crude fell 70 cents to settle at $101.84 on the New York Mercantile Exchange. Gold fell $33, or 3.5 percent, to $912.3 an ounce, while the dollar was mixed against other major currencies.