The benchmark S&P 500 ended little changed on Thursday as a fall in US jobless claims offset data showing a contraction in US manufacturing activity while investors awaited Federal Reserve Chair Jerome Powell's speech on Friday for clues on the central bank's monetary policy.
Data from the US Labor Department showed initial claims for state unemployment benefits dropped more than expected last week, suggesting the labour market was holding firm despite a manufacturing slowdown and concerns the economy is on a path toward recession.
However, IHS Markit's Flash Purchasing Managers' Index showed manufacturing activity contracting in August for the first time in nearly a decade. The reading prompted concern among some investors that economic weakness abroad and an escalating trade war with China could drag down the US economy. Following the data release, the yield curve between two-year and 10-year Treasury notes briefly inverted.
"The fact that manufacturing didn't just slow down but contracted, that was a little surprising," said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York.
Yet, Pursche said, "you had decent unemployment claims, they were slightly better than expected, so that's a counter act. That's why we don't expect there to be any kind of deep recession."
For much of the session, the S&P 500 oscillated between gains and losses. Several market strategists said investors were pausing ahead of Fed Chair Powell's speech on Friday at an annual gathering of central bankers in Jackson Hole, Wyoming, which is expected to yield some clues on whether the Fed will cut interest rates further.
The benchmark index dipped lower in intraday trade after Philadelphia Fed President Patrick Harker and Kansas City Fed President Esther George hinted at less dovish stances, saying the US economy does not need more stimulus at this point.
Those comments, coupled with the disappointing manufacturing data and the brief yield curve inversion, would in other circumstances be a "recipe for a sell-off," said Michael Antonelli, market strategist at Robert W. Baird in Milwaukee.
But, he said, "it boils down to the fact that it's the eve of a big event. The market wants to go into Jackson Hole on an even keel."
The Dow Jones Industrial Average rose 49.51 points, or 0.19 percent, to 26,252.24, the S&P 500 lost 1.48 points, or 0.05 percent, to 2,922.95 and the Nasdaq Composite dropped 28.82 points, or 0.36 percent, to 7,991.39.
Shares of Nordstrom Inc jumped 15.9 percent, the biggest percentage gain on the S&P 500, after the department store's quarterly profit beat estimates, joining Target Corp and Lowe's Cos Inc in delivering upbeat retail numbers.
The Dow received a boost from Boeing Co shares, which rose 4.2 percent as Reuters reported the planemaker is looking to increase production of its grounded 737 MAX jets as early as October, suggesting the aircraft's return to service may be on track for the fourth quarter.
Declining issues outnumbered advancing ones on the NYSE by a 1.16-to-1 ratio; on Nasdaq, a 1.54-to-1 ratio favoured decliners.
The S&P 500 posted 40 new 52-week highs and five new lows; the Nasdaq Composite recorded 61 new highs and 66 new lows.Volume on US exchanges was 5.65 billion shares, compared to the 7.48 billion average for the full session over the last 20 trading days.