Stocks stabilized Thursday after two days of sharp declines brought on by Libya's deepening political crisis. The Dow Jones industrial average recouped much of its losses after oil prices eased in the afternoon, but still ended down for a third straight day.
Broader market indicators were mixed. The Standard & Poor's 500 index lost 1 point and the Nasdaq composite index rose 15.
Investors were relieved to see oil prices fall for the first time in nine days after the International Energy Agency said fighting between forces loyal to Moammar Gadhafi and anti-government protesters in Libya were not affecting oil inventories as much as analysts had feared.
Oil fell 82 cents to settle at $97.28 a barrel on the New York Mercantile Exchange, having traded as high as $103.41 earlier in the day. Oil has jumped 18 percent since Feb. 15 while anti-government protests swept through countries in North Africa and the Middle East. Regimes in two of Libya's neighbors, Tunisia and Egypt, have fallen in the past month.
Traders are worried that fighting could threaten Libya's oil production and spread to other countries in the region, such as Saudi Arabia, the world's second-largest producer. Higher oil prices can also slow the U.S. economy by increasing transportation costs.
Reports of ample oil inventories "calmed some of the short-term fears in the market," said Bruce McCain, chief investment strategist at Key Private Bank. "But the fact that there is very little real information coming out the country is worrying."
The Dow Jones industrial average fell 37.28 points, or 0.3 percent, to 12,068.50. It had been down as much as 122 earlier in the day. Over the previous two days the Dow lost 285 points, or 2.3 percent, the largest drop since August 12.
The Standard & Poor's 500 index fell 1.30, or 0.1 percent, to 1,306.10. The S&P was also down for a third straight day.
The Nasdaq composite bucked the trend. It rose 14.91 points, or 0.6 percent, to 2,737.90.
The mixed stock performance came after the Labor Department reported that fewer people applied for unemployment benefits last week, a sign that the job market is recovering. The four-week average for applications, a figure closely watched by financial analysts, fell to its lowest level in more than two and a half years.
The housing market, however, continued to lag. The Commerce Department said sales of new homes fell significantly in January.
Several companies rose after announcing better than expected earnings.
Priceline.com Inc. jumped 8.5 percent after the online travel service reported a 73 percent surge in fourth-quarter earnings and raised its income forecast for the current quarter. Target Corp. rose 3.5 percent after the retailer reported an 11 percent gain in profit. H&R Block Inc. rose 5 percent after the tax preparation company said it expected its earning to be close to a break-even point in its fiscal third quarter.
Bond prices rose, pushing their yields lower. The yield on the 10-year Treasury note fell to 3.46 percent from 3.49 percent late Wednesday.
Rising and falling shares were about even on the New York Stock Exchange. Consolidated volume came to 5.2 billion shares.
AP Business Writer Chris Kahn contributed to this story.
(This version CORRECTS Nasdaq percentage gain.)