NEW YORK — Wall Street gave up a big early advance as the price of oil rose Thursday, with stocks closing moderately higher but also demonstrating how anxious investors are about inflation and the overall health of the economy. Bond prices fell sharply and yields shot higher in response to an upbeat retail-sales report.
Word late in the session that Yahoo had called off talks of any deal with Microsoft gave investors one more reason to rein in the enthusiasm that drove the day’s early rally.
Advancing oil prices, which have frequently sent stocks tumbling in recent weeks, stifled the optimistic mood that followed the Commerce Department’s report that retail sales rose 1 percent in May. The gain marked the biggest improvement in six months, and it offered some investors hope that the government’s 57 million economic-stimulus checks were indeed oiling the economy.
A buyout bid for Anheuser-Busch also lifted stocks.
But the turnaround in oil set off renewed worries about inflation and its effect on the economy. And a management shake-up at Lehman Brothers Holdings Inc. drew fresh attention to troubles in the financial sector. Lehman, which earlier this week said it would report a quarterly loss of $2.8 billion, on Thursday ousted its chief financial officer and chief operating officer. Lehman fell $1.05, or 4.4 percent, to $22.70.
The Dow rose 57.81, or 0.48 percent, to 12,141.58 after being up as much as 185 points earlier. The advance came a day after the Dow fell more than 200 points because of surging oil prices.
Broader stock indicators ended higher Thursday after dipping into negative territory late in the session. The Standard & Poor’s 500 index rose 4.38, or 0.33 percent, to 1,339.87, while the Nasdaq composite index rose 10.34, or 0.43 percent, to 2,404.35.
Bond prices fell Thursday as some investors left the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, soared to 4.20 percent in late trading from 4.07 percent late Wednesday.
The 10-year note at one point topped the 4.20 percent mark for the first time this year.
Light, sweet crude rose 36 cents to settle at $136.74 a barrel on the New York Mercantile Exchange.
The day’s economic numbers were enough to persuade some investors to buy after several tough sessions.
“I think expectations since last Friday have been grinding so low that any bit of news is taken with a huge lift,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
