U.S. stocks recovered from initial declines on Thursday in a choppy session as commodity prices kept the market in flux while a downgrade of Goldman Sachs dragged down financial shares.
Commodities rebounded after U.S. data showed a decline in jobless benefit claims last week and a revision to retail sales data suggested consumer spending in the first quarter might have been stronger than initially thought.
U.S. crude futures advanced 0.5 percent after a drop of more than 1 percent and the S&P energy sector <.GSPE> rose 0.1 percent after falling more than 1 percent. The sector has tumbled 7.9 percent this month after it gained 16.3 percent in the first quarter to propel the benchmark S&P 500 to a 5.4 percent gain.
Commodities have had a great run-in here. We are just going to get some volatility going forward, both in the up direction and down direction, said Wayne Schmidt, chief investment officer at Gradient Investments in St. Paul, Minnesota.
Financial shares fell after banking analyst Dick Bove of Rochdale Securities put a sell rating on Goldman Sachs Group and reduced the price target on the stock to $120 from $163, citing litigation worries.
Goldman shares slumped 4.5 percent to $141.17 as volume topped the 50-day moving average. Both the KBW bank index <.BKX> and the S&P financial sector <.GSPF> shed 0.6 percent.
Cisco Systems Inc warned on Wednesday it would fare worse this quarter than Wall Street had forecast. The tech company laid out plans for global job cuts as it struggles to revive growth. Its shares fell 4.5 percent at $16.99.
The Dow Jones industrial average <.DJI> dropped 16.04 points, or 0.13 percent, to 12,613.99. The Standard & Poor's 500 Index <.SPX> shed 0.04 point to 1,342.04. The Nasdaq Composite Index <.IXIC> gained 4.01 points, or 0.14 percent, to 2,849.07.
The recent spate of profit-taking in commodities pulled copper prices to their lowest since December 1, while spot silver lost more than 5 percent after tumbling about 9 percent Wednesday. The iShares Silver Trust dropped 2.3 percent to $33.55.
The Reuters/Jefferies CRB index <.CRB>, a broad measure of commodity performance, slipped 0.3 percent on Thursday and has lost 8.7 percent so far in May.
(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)