Reports that Italy and the European Union had agreed to economic reform measures fueled a burst higher.
вЂњIf there is one good thing out of this crisis it is these countries are finally learning the desperate need to liberalize their economies,вЂќ said Peter Boockvar, equity strategist at Miller Tabak.
Trading in a more than 400-point range that had the blue chips up 171 points at the start and then more than 200 lower, the Dow Jones Industrial Average +1.08% В was lately up 136.61 points at 11,520.59, with 24 of its 30 components rising.
Bank of America Corp.В -4.42% В fell hardest among the blue chips, off more than 4% after the financial-services company said in a regulatory filing Thursday it had unexpected demand for refunds on loans gone bad from Fannie Mae and Freddie Mac. Read more about Bank of America.
The S&P 500 IndexВ +0.84% В rose 9.49 points to 1,209.56, with financials down the most and consumer staples faring best among its 10 industry groups.
The Nasdaq Composite Index+0.13% В advanced nearly 1 point to 2,557.37.
For every stock advancing two declined on the New York Stock Exchange, where nearly 1.3 billion shares had traded by 1:15 p.m. Composite volume neared 5.4 billion.
Better-than-anticipated news on the beleaguered labor front had offered only brief relief as conflicted investors mulled one of the Wall StreetвЂ™s ugliest routs in years.
вЂњPeople are worried about liquidity and where the economy is going, and donвЂ™t see any sort of life preserver as yet,вЂќ said Doug Roberts, chief investment strategist at Channel Capital Research.
вЂњItвЂ™s QE3 or bust, at least in the sort term,вЂќ he added of the Federal ReserveвЂ™s bond-buying program otherwise known as quantitative easing.
Not good enough
The Labor Department said U.S. nonfarm payrolls climbed by 117,000 in July after an upwardly revised 46,000 addition in June.
But opening cheer from the better-than-expected report proved brief.
вЂњInvestors were relieved that the employment report wasnвЂ™t worse than expected, but todayвЂ™s numbers arenвЂ™t a reason to celebrate either,вЂќ said Kevin Giddis, a fixed-income analyst at Morgan Keegan.
The European Central Bank on Thursday resumed its bond-buying program after a four-month interval. But the ECB declined to extend the purchases to Spain and Italy, two nations currently the focus of concern. ECBвЂ™s bond buying: How not to intervene вЂ” Read MarketWatch news analysis.
вЂњThe ECB needs to continue to be aggressive in its efforts to solve the euro-zone debt crisis, but this will not happen overnight and as a result, will affect the U.S. economy in a negative way,вЂќ Giddis commented.
Domestically, the United States has вЂњвЂњa huge amount of debt that needs to be restructured, and is clogging up the system. People know what to do, but they also want to get re-elected,вЂќ said Roberts at Channel Capital Research.
On Thursday, the Dow industrials fell 513 points, its biggest daily point decline since December 2008.