The Dow industrials ended slightly higher on Thursday while the S&P 500 and the Nasdaq cut most of the day's losses in a sign that investor sentiment remains generally positive despite several weak manufacturing surveys from around the world. Pockets of strength included housing, with an index of housing stocks up 0.8 percent, following Wednesday's gains on better-than-expected housing market data. The S&P energy index rose 0.4 percent, in sync with a rally in Brent crude oil prices after a three-day slide. The S&P utilities index also gained 0.4 percent.
"What's happening in the market is 'What's next?'" said John De Clue, global investment strategist at US Bank, in Minneapolis. "It's a classic tug of war between indicators that things are improving and, on the other hand, some things appear to be a little more troubling."
Several economic indicators painted a sobering picture of the global economy. US manufacturing closed out its weakest quarter in three years this month, and the number of Americans filing new claims for jobless benefits held near two-month highs last week. The US data followed disappointing manufacturing reports from Europe and China. In a bright spot for the market, Trulia Inc surged 41.2 percent to close at $24 in its market debut, as investors bet an improvement in the housing market would benefit the online real estate listing service. At its session high, Trulia's stock touched $25.20 - up 48.2 percent from its initial public offering price of $17.
The Dow Jones industrial average rose 18.97 points, or 0.14 percent, to close at 13,596.93. The Standard & Poor's 500 Index dipped 0.79 of a point, or 0.05 percent, to 1,460.26. The Nasdaq Composite Index fell 6.66 points, or 0.21 percent, to close at 3,175.96.
After the bell, shares of Oracle Corp slipped 0.53 percent to $32.09 after the company reported that quarterly hardware sales tumbled 24 percent from a year earlier as the technology giant continued its struggle to turn around the computer division it acquired with its purchase of Sun Microsystems. In regular trading, Oracle closed at $32.26, down 1.6 percent on Nasdaq. The benchmark Standard & Poor's 500 Index has gained 5.9 percent since the beginning of August, driven higher mostly by expectations of more stimulus from central banks. A week ago, the Federal Reserve announced its third round of stimulus or quantitative easing, known as QE3, helping push stocks up last Friday within reach of five-year highs.
In a sign of bullishness, UBS raised its target level for the S&P 500 by the end of 2012 to 1,525 from 1,375 on Thursday, saying equity markets will climb after aggressive monetary easing by central banks. "Over the short run, we believe that the 'risk on' trade will continue, with a rotation into the most volatile and economically sensitive stocks," UBS' chief US equity strategist Jonathan Golub wrote in a research note.
Transportation stocks, sensitive to the nation's economic fortunes, ranked among the worst performers, a day after railroad company Norfolk Southern Corp said its earnings would fall short of expectations. Norfolk shares slid 9.1 percent to $66.11. The Dow Jones Transportation Average dropped 2.8 percent.
Boston Fed President Eric Rosengren said on Thursday that the Fed's actions last week "should result in stronger economic growth, and return us to full employment more quickly than would be the case, absent the policies." He was speaking to bankers and business leaders in the metropolitan Boston area.
Manufacturing in China contracted for an 11th straight month in September, according to a private-sector survey of factory managers; in the euro zone, a downturn in activity in the service sector steepened this month at the fastest pace since July 2009. Retailers' shares also fell. Bed, Bath & Beyond tumbled 9.8 percent to $62.08 a day after the company posted quarterly results that narrowly missed Wall Street's estimates as the result of higher costs.
Fellow retailer J.C. Penney Co Inc slumped 11.2 percent to $25.83 after Chief Executive Ron Johnson said new shops within stores are doing much better than other parts of its department stores, but it was "way too early to draw conclusions" as the retailer is still rolling out the strategy. The Morgan Stanley retail index slid 1.2 percent.
Facebook Inc's shares fell 3 percent to $22.59 after the company said it will start charging businesses to run promotional offers on its social network, turning a free service into a potential source of revenue. Volume totalled about 6.15 billion shares traded on the New York Stock Exchange, the Nasdaq and the Amex, compared with the year-to-date average daily closing volume of 6.54 billion. Decliners outnumbered advancers on the NYSE by a ratio of about 3 to 2, while on the Nasdaq, five stocks fell for every three that rose.