NEW YORK – Wall Street fluctuated Thursday as investors, still nervous about growing signs of a weakening economy, picked up bargains from stocks that were beaten down in a two-day selloff. Gains in energy stocks helped the Dow Jones industrial average while the technology-heavy Nasdaq composite index slid after online retailer Amazon.com lowered its revenue forecast.
There was little confidence behind any buying; investors were attracted to stocks that were pummeled in two days of selling that sliced nearly 750 points off the Dow. There is a growing belief on the Street that the economy is either in a recession or headed for one despite government relief efforts and gradual improvements in world credit markets.
With its move higher, Wall Street is living up to predictions that trading will remain volatile for some time to come as investors try to test whether the market has formed a bottom. Many recent rallies have brought out sellers who had been waiting to cash out on market advances.
"It's people coming in that see tremendous value, but for a more sustainable advance I think we need more time," said Steven Goldman, chief market strategist at Weeden & Co. in Greenwich, Conn.
Wall Street digested a rush of corporate news. Goldman Sachs Group Inc. is preparing to cut about 10 percent of its work force, according to a person briefed on the plan who requested anonymity because the company hadn't publicly disclosed details of the plan.
Meanwhile, Amazon.com Inc. lowered its revenue guidance for the year amid a weakening economy. Drugmaker Eli Lilly and Co. said it booked a loss for the third quarter on a charge of almost $1.5 billion for an expected settlement of an investigation into the marketing of its top-selling drug, Zyprexa. Dow Chemical Co. said its quarterly profit rose 6 percent, helped by price hikes that offset a nearly 50 percent increase in raw materials and energy costs.
A snapshot of the labor market signaled that it continues to weaken. The Labor Department reported Thursday that new applications for unemployment benefits rose 15,000 last week to a seasonally adjusted 478,000. That was slightly above analysts' estimates of 470,000. Jobless claims above 400,000 are considered a sign of recession. A year ago, claims stood at 333,000, the department said. Analysts caution, however, that the weekly readings can be volatile.
Investors viewed the data as more evidence that the financial crisis is battering the economy and forcing companies to cut back. Market anxiety was already high as investors sift through a batch of corporate forecasts that has stirred intense unease about the health of the global economy.
Thomas J. Lee, U.S. equities strategist at JPMorgan Chase & Co. in New York, cautioned that the market will need to rein in its sharp swings before some investors will feel confident enough to return.
"I don't think anyone can buy and sell stocks right now with conviction," he said.
In midday trading, the Dow rose 12.27, or 0.14 percent, to 8,531.48 after earlier falling 125 and rising more than 277. On Wednesday, the Dow lost 514 points as investors worried that the global economy is poised to weaken. That was on top of a 231-point loss Tuesday.
Broader stock indicators declined. The Standard & Poor's 500 index fell 4.44, or 0.50 percent, to 892.34, and the Nasdaq composite index fell 25.68, or 1.59 percent, to 1,590.07.
Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 611.9 million shares.
Credit markets continued to show signs of slow improvement, although figures released Thursday suggested a return to more normal market conditions will take time. The rate on three-month loans in dollars — known as the London Interbank Offered Rate, or Libor — was unchanged at 3.54 percent. The rate fell to that level on Wednesday and is the lowest since Sept. 24.
Demand for short-term Treasury bills, regarded as the safest assets around, was little changed. The three-month Treasury bill yielded 0.97 percent, down from 1.01 percent late Wednesday. Still, the levels are a notable improvement from the 0.20 percent seen last week, when investors were willing to trade the slimmest of returns for a safe place to keep their money.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, stood flat at 3.60 percent from late Wednesday.
The dollar was mixed against rival currencies after jumping to multiyear highs Wednesday, while gold prices fell.
Light, sweet crude rose $1.84 to $68.59 on the New York Mercantile Exchange. The contract on Wednesday fell to a new 16-month low as big increases in U.S. crude and gasoline stocks fed beliefs that the economic downturn is eroding demand for energy.
The rise in oil gave a lift to energy companies and helped ease some worries about the economy, according to Ryan Larson, head of equity trading at Voyageur Asset Management, a subsidiary of RBC Dain Rauscher in Chicago. While the stock market often cheers a drop in oil, recent declines have worried some investors that they portended a falloff in economic activity.
"You're seeing a connection between oil and the markets, and we're seeing a bounce," Larson said. "The market is thinking maybe the slowdown might not be as imminent as we first thought, or maybe its priced into the market."
Oil fell Wednesday to its lowest level in 16 months, hurting energy stocks. But the rebound sent them higher Thursday. Exxon Mobil Corp. rose $3.82, or 5.9 percent, to $68.39, while Chevron Corp. advanced $3.77, or 6.1 percent, to $65.51.
Goldman Sachs fell $8.21, or 7.2 percent, to $106.50. Amazon fell $3.01, or 6 percent, to $46.98. Eli Lilly rose 43 cents, or 1.3 percent, to $32.54, while Dow Chemical rose $1.99, or 9 percent, to $24.10.
The Russell 2000 index of smaller companies fell 8.86, or 1.77 percent, to 493.11.
Overseas, Japan's Nikkei stock average fell 2.46 percent. Britain's FTSE 100 rose 0.82 percent, Germany's DAX index fell 1.12 percent, and France's CAC-40 rose 0.38 percent.