Oil prices closed at $46.60, up $1.10, on the New York Mercantile Exchange, reaching another record high and giving greater credence to investor fears that oil may have to reach $50 or beyond before falling back.

Wall Street was also worried about the economy. The University of Michigan reported that overall consumer confidence levels softened unexpectedly in mid-August amid a big drop in consumers' views on the economic outlook. News that the trade deficit ballooned 19.1 percent from May to June also helped undermine the market's gains.

"There's still a lot of uncertainty in the market right now, and coming in during such a traditionally slow month, there's just not a lot going on," said Michael Murphy, head trader with Wachovia Securities in Baltimore. "Valuations are appealing in a lot of sectors, but with the conventions coming up and oil dominating everything, big investors are just sitting on their hands."

According to preliminary calculations, the Dow Jones industrial average gained 10.76, or 0.1 percent, to 9,825.35.

Broader stock indicators were also narrowly higher. The Standard & Poor's 500 index was up 1.57, or 0.2 percent, at 1,064.80, while the tech-focused Nasdaq composite index climbed 4.73, or 0.3 percent, to 1,757.22, buoyed by positive earnings from Dell Inc.

Despite yesterday's massive selloff, the major indexes were mixed for the week. The Dow and the S&P 500 both edged 0.1 percent higher, while the Nasdaq fell 1.1 percent.

Today's trading was dominated by the same issue that sent stocks gyrating throughout the week: oil prices. As oil futures kept climbing on world markets, Wall Street grew increasingly uneasy about the possibility of accelerating inflation, especially when economic growth seems uncertain.

Moreover, with oil prices rising, fewer jobs being created and stocks tumbling, consumer confidence is waning. The University of Michigan's consumer confidence index had a preliminary reading of 94 in August, down from the 96.7 reading in July, according to Dow Jones News-wires.