NEW YORK - Stocks rose on Thursday after a stronger-than-expected May retail sales report and a $46 billion takeover bid for Anheuser-Busch from an overseas rival helped the market recover from a string of deep losses.
Microsoft Corp climbed more than 4 percent and was the top-weighted gainer in the S&P 500 after ending deal talks with Yahoo -- a relief for investors who saw the possible acquisition as risky. Yahoo shares, however, fell sharply and weighed on the Nasdaq.
Before the news about the collapse of the Yahoo talks, the market fell from session highs as a sharp drop in oil prices reversed and crude oil ended the session higher.
"Microsoft rallied because of them saying they are not going to pursue a partnership with Yahoo, which obviously was a negative for Yahoo, but the news helped the Dow because Microsoft is the Dow component which staged the biggest percentage gain," said Mark Schlarbaum, head trader at Global Capital Management in Conshohocken, Pennsylvania.
The Dow Jones industrial average was up 57.81 points, or 0.48 percent, at 12,141.58. The Standard & Poor's 500 Index was up 4.38 points, or 0.33 percent, at 1,339.87. The Nasdaq Composite Index was up 10.34 points, or 0.43 percent, at 2,404.35.
Microsoft shares rose 4.1 percent to $28.24, while Yahoo's stock slid 10.1 percent to $23.52, both on the Nasdaq.
Shares of No. 1 retailer Wal-Mart Stores rose 1 percent to $59.11 on the NYSE after data showed retail sales growth topped economists' forecasts. Mid-priced big-box chain Kohl's rose 3 percent to $43.88 and high-end department store owner Saks Inc gained 2.4 percent to $11.99.
"When oil rallied in the afternoon, I thought that would bite retail stocks more than it did," Schlarbaum said. "That tells you the market is oversold after five straight downbeat days."
The market had started Thursday's session at its most oversold condition since early March, according to the 14-day relative strength index of the S&P 500 index.
Shares of Anheuser-Busch rose 5.2 percent to $61.40 after the brewer of Budweiser said it had received an unsolicited takeover bid from Belgium-based InBev.
Shares of Lehman Brothers sank for a fifth straight day after the U.S. investment bank replaced its chief financial officer and its chief operating officer. Shares of Lehman fell 4.4 percent to $22.70 and are down 33 percent since Thursday.
Qualcomm Inc was a top contributor to the gains in both the S&P 500 and the Nasdaq after the wireless chip maker lifted its quarterly profit outlook. Qualcomm gained 5.8 percent to $48.98 on the Nasdaq.
Crude oil settled at $136.74 a barrel, up 36 cents, after erasing an earlier drop of almost $4. Soaring crude prices had knocked the Dow down 200 points on Wednesday amid fears that higher energy prices would stoke inflation.
Trading volume was moderate on the New York Stock Exchange, with about 1.33 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion. On the Nasdaq, about 2.27 billion shares traded, exceeding last year's daily average of 2.17 billion.
Advancing stocks outnumbered declining ones by a ratio of about 16 to 15 on the New York Stock Exchange, while on the Nasdaq, about 15 stocks rose for every 13 that fell.