The S&P 500 and the Nasdaq rose slightly on Thursday after encouraging data on the jobs market, but gains were limited by a stronger U.S. dollar.
The Labor Department said the four-week moving average for claims for unemployment benefits slipped to a two-year low, reviving hopes a labor market recovery is under way.
But the Dow was pressured by major manufacturer DuPont
Today is a good day to be relatively weak, considering we had a 3 percent rally in the first 3 days this month, said Frank Gretz, market analyst and technician for Shields & Co, a brokerage in New York.
Typically the month of December is strong at the beginning and strong at the end, and there is a lot of bullishness around.
Investors said they remained bullish for a year-end rally. The CBOE Volatility Index VIX <.VIX>, a barometer of Wall Street anxiety, fell more than 1 percent to 17.56, its lowest level since April. The VIX usually moves inversely to the benchmark S&P index.
The VIX closed under 18 for two straight days, which is considered to be the start of a sustained period below its long-term average of just above 20, said MKM derivatives strategist Jim Strugger.
The Dow Jones industrial average <.DJI> was down 26.56 points, or 0.23 percent, at 11,345.92. The Standard & Poor's 500 Index <.SPX> was up 0.74 point, or 0.06 percent, at 1,229.02. The Nasdaq Composite Index <.IXIC> was up 2.20 points, or 0.08 percent, at 2,611.36.
Technical signs and a forecast from an international bank suggested a positive outlook for U.S. stocks.
The S&P 500 rose above 1,228, a resistance level that represents the 61.8 percent Fibonacci retracement of the 2007-2009 bear market slide, a key technical indicator.
We look for a sustained move above 1230-35 to get the next leg higher in the post-2009 bull trend under way, Credit Suisse said in a report. The investment company raised its 2011 outlook on the benchmark index to 1,350 from 1,223.
The Labor Department data showed first-time claims for jobless benefits fell more than expected last week, and the report was viewed as positive after last week's disappointing payrolls figures.
But offsetting gains, the dollar gained 0.4 percent <.DXY> against major currencies and the euro fell after Ireland's Labor Party said it will vote against a financial bailout package before parliament.
Equities and the euro have moved in tandem of late with the currency seen as a proxy for sovereign debt risk.
DuPont slipped 1.5 percent to $48.14 after the company gave earnings guidance for next year. Analysts' expectations fell in the middle of the range.
Exxon Mobil was down 0.6 percent at $71.43.
Financial stocks outperformed other sectors with Bank of America
(Additional reporting by Doris Frankel; Editing by Kenneth Barry)