MARKET SNAPSHOT: U.S. Stocks Rebound After Choppy Session

By Polya Lesova and Victor Reklaitis, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks ended higher on Thursday, snapping a two-session losing streak, as investors eagerly awaited Friday's May employment report for clues about monetary policy.

Thursday's gains for stocks came after two sessions of losses that saw the S&P 500 index (SPX) drop 1.9%.

Trading was very choppy during Thursday's session, with stocks moving in and out of positive territory multiple times. In the afternoon, stocks fell to session lows only to rebound and finish at their intraday highs.

After dropping as much as 116.37 points, the Dow Jones Industrial Average (DJI) rose 80.03 points, or 0.5%, to end at 15,040.62.

Telecommunications giant Verizon Communications Inc. (VZ) rose 3.5%, the biggest gainer in the Dow. Oil major Chevron Corp. (CVX) fell 0.8%, the biggest decliner in the blue-chip index.

The S&P 500 index (SPX) rose 13.66 points, or 0.9%, to end at 1,622.56, with telecommunications the top gainer among its 10 major industry groups, all of which finished in positive terrain.

The Nasdaq Composite index (RIXF) gained 22.58 points, or 0.7%, to finish at 3,424.05.

The Labor Department's jobs report is slated to be released at 8:30 a.m. Eastern time Friday. Economists polled by MarketWatch expect a rise of 164,000 in nonfarm payrolls and an unchanged jobless rate of 7.5%.

Speculation about the jobs report caused a considerable amount of jitters in the market on Thursday. Traders are watching labor-market data closely for any clues as to when the Federal Reserve may begin to scale back, or "taper," its $85-billion-a-month bond-buying program, which has supported equity prices. (Reader poll: What do the markets really want -- a good or bad jobs report?)

Ahead of the opening bell Thursday, data showed that U.S. jobless claims fell by 11,000 to 346,000 in the week ended June 1, essentially in line with expectations.

Marc Pado, U.S. market strategist at investment advisory firm DowBull, said the market needs a jobs number Friday that hits a "sweet spot," and, in the meantime, traders can expect some hesitation in stocks.

If the jobs number is too good, stocks could fall on worries the Fed will taper its bond buys, but a figure that's too low also would weigh on stocks, according to Pado. "I think that's why you're seeing such choppy action today," he said. "What the market needs now in order to bounce off this level is a sweet-spot number in the middle."

The odds of a smaller increase in payrolls, however, grew Wednesday after a disappointing ADP report on private-sector jobs.

Andrew Wilkinson, chief economic strategist at Miller Tabak, said it's a little premature to expect a rally before Friday's payrolls report.

"I don't necessarily think the selling pressure's gone away," Wilkinson said. He added that the market's recent move down is healthy and "could go on for several more weeks."

In the currency markets, the U.S. dollar (USDJPY) slumped 1.9% on Thursday to trade at 97.09 Japanese yen.

"It all has to do with the yen carry trade," said Andrew Brenner, head of international fixed income at National Alliance Securities, referring to the brief afternoon selloff for stocks and other risk assets. He said there was no specific news Thursday, just continuing trends and more selling of the dollar versus the yen.

"People are taking losses on the yen carry trade, and they're forced to sell their risk assets," he said. The yen carry trade involves selling the yen and using the proceeds to buy higher-yielding assets.

Among individual stock movers, food company J.M. Smucker Co. (SJM) was the biggest decliner in the S&P 500, falling 3.9%.

Shares of L Brands Inc. (LTD) fell 1.9% after the company said its monthly same-store sales rose 3%. Analysts polled by Thomson Reuters expected a same-store-sales increase of 3.2%

Shares of SodaStream International Ltd. (SODA) gained 2.7%. Israel's Calcalist newspaper reported that PepsiCo Inc. (PEP) is in talks to buy SodaStream for $2 billion. However, a PepsiCo spokesman told MarketWatch that the report was "completely and totally untrue."

Overseas, Japan's Nikkei Stock Average fell 0.9% and the Stoxx Europe 600 index dropped 1.2%.

The European Central Bank kept interest rates unchanged, as expected, and in his monthly news conference ECB President Mario Draghi largely stuck to views he has expressed previously.

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