Stocks Hang On to Snap Losing Streak

"I think mostly this is the traders having fun," he said. "They want volatility; every day when the market goes up, goes up, goes up, there's not a lot of opportunity for these guys to play the short side, play the long side and move the market."

Stocks were driven lower Wednesday by persistent worries about the stability of Spain's banking system and Greece's future in the eurozone, but cut losses towards the end of the session on the confirmation that Greece would be receiving its next round of aid from Europe's bailout fund.

The European Financial Stability Facility has decided to release €4.2 billion ($5.4 billion) of a €5.2 billion loan program. The EFSF plans on releasing the rest of the €1 billion over time.

Meanwhile, Greece showed signs of progress towards forming a government. Fotis Kouvelis, the leader of smaller leftist party Democratic Left, broke ranks with the leftist Syriza party, in a sign that it might be more open to forming an alliance with the Socialists and the conservative New Democracy parties.

A euro relief rally ensued, with the currency rebounding from a three-month low Thursday. London's FTSE rose 0.25% and the DAX in Germany climbed 0.7%.

In Spain, the government effectively nationalized the country's fourth-largest bank, Bankia, as the banking system there remains awash in toxic assets from the fallout of a building and property market crash in 2008. Spain government officials say it will do more on Friday to bolster the troubled banks.

On Thursday, the markets were also provided with some relief after initial jobless claims for the week ended May 5 fell by 1,000 to a seasonally adjusted 367,000 from the previous week's upwardly revised figure of 368,000, according to the Labor Department. Economists had expected jobless claims of 369,000.

The four-week moving average was 379,000, down 5,250 from the previous week's average of 384,250.

Andrew Wilkinson, chief economic strategist at Miller Tabak, is taking a conservative position on the jobs data.

"We will need to see further consistency in the weekly data before we can revert to a positive tone on the labor market," he said.

Dan Greenhaus, chief global strategist at BTIG, concurred, saying that if the data is repeated or improves a bit throughout May, the pace of job creation could accelerate to more normal levels of between 150,000 and 200,000.

"Nonetheless, that level of job creation is really quite tepid," he said.