Stocks fluctuated Thursday as a deal for Dow Chemical Co. to acquire rival Rohm and Haas Co. boosted investor confidence but could not fully offset continued worries about the health of financial companies.

Market sentiment got a lift from Dow Chemical’s more than $15 billion all-cash deal for the specialty chemicals maker, but mortgage finance companies Fannie Mae and Freddie Mac fell sharply because of continued doubts about their access to financing.

Shares in the two government-chartered companies have struggled on worries they will be forced to sell more new shares than anticipated to compensate for losses from the housing slump.

Fannie shares fell more than 10 percent and Freddie shares dropped more than 20 percent. Investment banks were also weak, with Lehman Brothers Holdings Inc. the steepest decliner with a loss of more than 11 percent.

The declines in financials came after Treasury Secretary Henry Paulson told Congress that the market can’t expect the government to bail out troubled financial companies.

“For market discipline to effectively constrain risk, financial institutions must be allowed to fail,” Paulson said.

Stocks moved in and out of positive territory, underscoring investors’ uncertainty about the financial and their quarterly results, many of which are due next week.

“Investors lack real clarity from the banks,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald in New York. “It’s this uncertainty that keeps investors out of the market so what you get is a situation where you’re reacting to news,” he said. “There are a lot of crosscurrents.”

In midday trading, the Dow Jones industrial average rose 83.21, or 0.75 percent, to 11,230.65.

Broader stock indicators also rose. The Standard & Poor’s 500 index rose 9.17, or 0.74 percent, to 1,253.86, while the Nasdaq composite index rose 27.05, or 1.21 percent, to 2,261.94.

Bond prices ticked higher as stocks fluctuated. The yield on the benchmark 10-year Treasury note, which moves opposite to its price, slipped to 3.81 percent from 3.82 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.

Meanwhile, the Organization of Petroleum Exporting Countries said Thursday world energy needs will spike by more than 50 percent by 2030. But it said adequate oil reserves, conservation and new methods of recovery mean supply will keep pace with demand. Oil rose $1.09 to $137.14 a barrel. The market has been highly sensitive in recent months to sharp moves in the price of oil.

A Labor Department report showed new applications for unemployment insurance fell by a seasonally adjusted 58,000 to 346,000 last week. But continuing claims rose, indicating lingering weakness in the labor market.

The number of people continuing to receive unemployment benefits jumped by 91,000 to 3.2 million for the week ending June 28, the most recent period for which that information is available. The gain leaves the filings at the highest level since late December 2003.

In corporate news, Wal-Mart Stores Inc. credited sales of groceries and tax-rebate checks with giving a boost to June results, and it raised its forecast for the current quarter.

The world’s largest retailer said its same-store sales, or sales at stores open at least a year, rose 5.8 percent for the five weeks ended July 4. Including fuel, same-stores sales rose 6.4 percent. Analysts had expected a gain of 3.8 percent according to Thomson Financial. The stock fell 88 cents to $56.79.

Costco Wholesale Corp. fell $1.13 to $71.02 after reporting that its same-store sales rose 9 percent in June including sales of gasoline. Wall Street had expected the warehouse club operator to post growth of 8.5 percent.

Discounters have been beneficiaries of consumers’ search for ways to help their strained household budgets. The health of the consumer is a concern for Wall Street, as consumer spending accounts for more than two-thirds of U.S. economic activity.

Overseas, Japan’s Nikkei stock average rose 0.12 percent. In afternoon trading, Britain’s FTSE 100 fell 2.09 percent, Germany’s DAX index declined 1.59 percent, and France’s CAC-40 fell 2.62 percent.

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