Stocks Finish Higher

A rally in chip shares helped lift the broader market. Investors weighed mixed data on jobless claims and the trade deficit

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Major U.S. stock indexes finished higher Thursday, snapping their recent losing streak. Gains were led by a rally in chip issues after Banc of America upgraded the semiconductor sector. Further support for equities came from other analyst upgrades and some positive earnings guidance reports. The rebound occurred even though U.S. retailers as a group posted their worst March sales in 13 years, gasoline futures continued to climb, and both Treasury Secretary Paulson and Federal Reserve Chairman Bernanke acknowledged the weakness of the economy in speeches. Wall Street also weighed data reports showing a decline in first-time jobless claims fell last week and an expansion in the U.S. trade deficit in February.

Also Thursday, Microsoft's (MSFT) attempts to buy Yahoo (YHOO) continued to get the market's attention. Among the many negotiations in progress, Yahoo is reportedly discussing a deal with Time Warner's (TWX) AOL, a combination of their Internet operations designed to thwart Microsoft's bid. Yahoo is also getting help from Google (GOOG) to make its Web-search more profitable. Finally, Microsoft was reportedly exploring make a new joint bid for Yahoo with Rupert Murdoch's News Corp. (NWS).

On Thursday, the Dow Jones industrial average finished higher by 54.72 points, or 0.44%%, at 12,581.98. The S&P 500 index gained 6.06 points, or 0.45%, to close at 1,360.55. The Nasdaq composite index rose 29.58 points, or 1.27%, to end the session at 2,351.70.

Activity in the broader market was positive, with 19 stocks rising in price for every 11 that declined on the New York Stock Exchange. The ratio on the Nasdaq was 17-12 positive.

The Nasdaq got a boost from a positive analyst call on the semiconductor group. Banc of America Analyst Sumit Dhanda upgraded the firm’s rating on Intel (INTC), Analog Devices (ADI), National Semiconductor (NSM), PMC-Sierra (PMCS), LSI Logic (LSI), and Semtech (SMTC), saying that indicators are signaling that a bottom is near for the group.

U.S. jobless claims fell 53,000 to 357,000 last week, bringing the weekly gauge of the job market below the dangerous 400,000 mark. The number is lower than expected, Action Economics said, but "the Easter holidays likely continued to distort the data."

The U.S. trade deficit widened in February to $62.3 billion from $58.95 billion in January. Imports jumped 3.1%, a number likely boosted by higher commodity prices. The weaker dollar helped push exports 2% higher. The trade deficit with China narrowed to $18.4 billion from $20.3 billion in January.

Bernanke acknowledged strain in financial markets and called for stronger nationwide standards for mortgage brokers. "We do not have the luxury of waiting for markets to stabilize before we think about the future," Bernanke told a luncheon in Richmond, Va. The Fed chairman also called for more consistent oversight for lenders and better consumer protections. Lenders must consider a borrower's ability to repay loans, Bernanke said. "We are addressing those financial strains and their potential economic consequences with a number of tools, including the provision of extra liquidity to the system and reductions in our target for the federal funds rate."

Bank regulators, including the Federal Reserve, should help firms manage their risk, he said. "