By JeeYeon Park, CNBC.com
Stocks rebounded Thursday after a six-day selloff to close higher for the first time in June, after investors cheered the international trade report and following the Greek Cabinet's decision to support a new round of austerity measure for its debt-ridden nation.
The Dow Jones Industrial Average gained 75.42 points, or 0.63 percent to close at 12,124.36, slipping slightly from its intra-day highs.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, tumbled more than 5 percent to finish below 18.
Energy, materials and financials were the leaders among the key S&P sectors.
Trading was light with volume on the consolidated tape of the NYSE at 3.34 billion shares, while 909 million shares changed hands on the floor.
“This is much more of a technical rebound and there’s a lot of bargain hunting going on,” according to Kenny Polcari, managing director at ICAP Equities. “You’re going to continue seeing a churn in the markets…We’re in for a slow grind lower over the summer.”
Polcari said 1,290 on the S&P is the next target he is watching, but without any positive macroeconomic news going forward, the index could easily decline to 1,250—which is the March low, and coincidentally the 200-day moving average.
Banks traded higher across the board, after slumping in the recent weeks. Citigroup and Wells Fargo gained almost 3 percent each. Even Morgan Stanley gained after Rochdale lowered its price target on the financial giant to $28 from $37.50. But the sector is still the worst performer so far this year.
Materials and ag-related stocks such as Deere and CNH climbed following the USDA's monthly crop production report, which lowered projected corn surplus and acres planted and helped send futures to a record high. Monsanto shares climbed after the firm's board approved a dividend of 28 per share.
On the tech front, Texas Instruments cut its earnings and revenue forecast, blaming the shortfall on major client Nokia's struggling cellphone business. Meanwhile, Bank of America and Citigroup cut their price targets on TI. Nokia gained even after the firm's chief technology officer announced a leave of absence and is unlikely to return after disagreements over the strategy of the flailing company.
Also on the tech front, Intel announced "multi-million" investments in two Russian online firms, in a fresh sign of investor confidence in growth prospects of internet businesses.
Meanwhile, JPMorgan lowered its PC and tablet forecasts for 2011, due to an uncertain growth profile in China and weakness in global consumption. The firm warned companies including Nvidia, Micron, Seagate and Western Digital.
JM Smucker gained after the maker of Jif peanut butter posted better-than-expected results and forecast strong sales, as the company continues to raise prices of its brands without putting off shoppers.
National Semiconductor is slated to post earnings after-the-bell Thursday.
In IPO news, Fusion-io skyrocketed in their market debut, underscoring investors' hot interest in tech start-ups. But Taomee slumped as U.S.-listed Chinese companies are being put under more scrutiny following a handful of accounting scandals.
Oil prices gained after OPEC failed to reach agreement over increasing production, with U.S. light, sweet crude rose $1.19, or 1.18 percent, to settle at $101.93 a barrel, while London Brent crude climbed over $118. Gold advanced to settle at $1,542.70 an ounce.
Treasury prices extended losses after the government auctioned $13 billion in 30-year bonds, which had a high yield of 4.238 percent and a bid-to-cover of 2.63.
In the day's economic news, the U.S. trade deficit narrowed unexpectedly to $43.7 billion in April from a revised estimate of $46.8 billion as exports rose to a new record, according to the commerce department. Analysts expected the April trade gap to widen to $48.8 billion.
And wholesale inventories rose less than expected in April, but seemed enough to boost investor confidence and stocks.
Meanwhile, initial claims for state jobless benefits increased to 427,000, the Labor Department reported. The rise kept first-time claims perched above the 400,000 mark for the ninth week in a row. Analysts normally associate a level below that with steady job growth. Economists expected claims to drop to 415,000.
The greenback gained against the euro after the ECB President Jean-Claude Trichet signaled a rate hike next month that already had been widely expected, leaving little room for further upside in the single currency.
European shares rose sharply, bouncing from six days of losses, as investors snapped up beaten-down stocks, notably those related to commodities. Meanwhile, Greece's Cabinet backed a new round of austerity measures that are essential for the debt-ridden country to continue receiving funds from its international bailout.