By Kristina Cooke
NEW YORK (Reuters) - Stocks clawed back from five-year lows on Thursday, led by a bounce in energy and health-care stocks after oil recovered from a 16-month trough and top pharmaceutical companies posted reassuring earnings.
The session was typical of the recent volatility gripping Wall Street, with stocks swinging in a 7 percent range and the day's final direction only becoming clear in the last minutes of trading.
In an otherwise dismal earnings season, drug makers Amgen Inc, Bristol-Myers Squibb and Eli Lilly and Co offered some relief with stronger-than-expected results and relatively positive outlooks. The three helped lead the S&P health-care index up 1.6 percent.
A rebound in oil prices from their lowest since June 2007 fed a big rally in energy stocks, with Exxon Mobil and Chevron contributing the most to the Dow's 172-point gain.
The day's sharp swings were exacerbated by hedge funds' and mutual funds' so-called forced selling of stocks to raise cash to meet their investors' large-scale redemptions, which also dragged on the market, traders said.
"There's been material turnarounds in the last 15-30 minutes of trading over a couple of trading sessions and there has been no fundamental reason," said Keith Wirtz, chief investment officer of Fifth Third Asset Management in Cincinnati.
"There's something unexplainable going on ... the wild swings are leading to speculation that something is going on and perhaps investigations into these erratic moves may take place, if they have not already."
The Dow Jones industrial average rose 172.04 points, or 2.02 percent, to 8,691.25, while the Standard & Poor's 500 Index gained 11.33 points, or 1.26 percent, to 908.11. The Nasdaq Composite Index, however, was down 11.84 points, or 0.73 percent, at 1,603.91.
The rally in the last 30 minutes was not enough to pull the Nasdaq out of the red, though. It closed at a fresh five-year low -- down for a third straight day -- on concerns about technology spending in a global economic slump and after a weak holiday season sales outlook from online retailer Amazon.com Inc climbed 6.6 percent as U.S. front-month crude futures rose $1.09, or 1.63 percent, to settle at $67.84 a barrel on expectations that OPEC will agree to cut output at an emergency meeting.
Exxon Mobil's shares shot up 9 percent to $70.39, while Chevron's stock jumped 8.2 percent to $66.77 on the New York Stock Exchange.
The economic picture remained gloomy. U.S. workers lined up for jobless benefits in unexpectedly large numbers last week as the trauma in financial markets continued to hammer the economy, a government report showed.
Dow Chemical jumped 10.5 percent to $24.43 after the largest U.S. chemical maker posted lower third-quarter profit, but still beat expectations on strong results from its agricultural business. But Dow warned that the global economy was likely to struggle through a recession for most of 2009.
Coca-Cola Co , meanwhile, was one of the heaviest weights on the Dow after bottler Coca-Cola Enterprises Inc cut its 2008 profit forecast. Coke, which owns about 40 percent of the bottler, lost 5.1 percent to $43.06.
In the health-care sector, Amgen shares rose 11.8 percent to $55.55, Eli Lilly's stock gained 4.3 percent to $33.48 and Bristol-Myers Squibb rose 3 percent to $18.05.
Trading was muted on the New York Stock Exchange, with about 1.69 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 3.14 billion shares traded, above last year's daily average of 2.17 billion.
Declining stocks outnumbered advancing ones on the NYSE by 5 to 3 and, on Nasdaq, by 5 to 2.
(Editing by Jan Paschal)
