NEW YORK - Wall Street steadied itself yesterday after two sessions of steep declines, rebounding slightly as oil prices moderated.

Oil set another trading record overnight - moving above $135 a barrel for the first time - then pulled back below $131, offering some relief for stock investors. Meanwhile, the Labor Department said the number of workers seeking unemployment benefits declined 9,000 last week to 365,000. The market expected a slight increase.

But the economic fallout from ascendant energy prices remained Wall Street's focus.

The modest rise in stocks followed a decline in the Dow Jones industrial average that totaled about 427 points, or 3.3 percent, over the course of Tuesday and Wednesday. It was the steepest two-day loss since late February. Stocks have declined in three of the last four sessions.

The Dow rose 24.43, or 0.19 percent, to 12,625.62. The Standard & Poor's 500 index rose 3.64, or 0.26 percent, to 1,394.35, and the Nasdaq composite index rose 16.31, or 0.67 percent, to 2,464.58.

Light, sweet crude fell $2.36 to settle at $130.81 a barrel on the New York Mercantile Exchange, pulling back from an earlier record of just above $135. That retreat helped the stock market find some stability after two days of drops.

"Hopefully it will last. But I think oil's been scaring people," said Todd Leone, managing director of equity trading at Cowen & Co. He pointed out that the airline industry was getting particularly hard hit, which "slows down the whole economy a bit."

The spike in oil prices has also fanned investors' uneasiness about consumer-level inflation. The big fear is that Americans worried about rising prices for everything from gasoline to food will be less willing to reach into their wallet for other items. A pullback could deal a major blow to the economy because consumer spending accounts for more than two-thirds of U.S. economic activity.

In corporate news, Ford Motor Co. warned that it no longer expects to return to profitability by next year and that it is trimming North American production of pickups and SUVs for the rest of this year because of high gasoline prices and a shaky economy. The automaker also lowered its forecasts for U.S. sales for 2008. Ford fell 64 cents, or 8.21 percent, to $7.16.

Power wholesaler NRG Energy Inc. said it offered to acquire rival Calpine Corp. for about $11.3 billion in stock. Calpine, which has dual headquarters in San Jose, Calif., and Houston, released details of the unsolicited bid Wednesday. NRG fell $2.16, or 5.08 percent, to $40.35, while Calpine jumped $1.72, or 8.08 percent, to $23.00.

The Russell 2000 index of smaller companies rose 5.90, or 0.81 percent, to 733.01.

The dollar was mixed, while gold fell.

Overseas, Japan's Nikkei stock average rose 0.37 percent. Britain's FTSE 100 fell 0.27 percent, Germany's DAX index rose 0.42 percent, and France's CAC-40 advanced 0.02 percent.