U.S. stocks rose modestly on Thursday, snapping a five-day losing streak, in the wake of weak data reflecting sluggish economic growth.
The advance came on hopes the Chinese government would take steps to bolster the country's slowing growth, and as U.S. jobless claims fell a lot more than expected in the latest week. Cyclical sectors like energy and financials, which are tied to the pace of growth, rallied.
Jobless claims dropped by 23,000 to 359,000, significantly more than the 4,000 drop that had been expected.
Still, the final read on second-quarter gross domestic product showed growth of 1.3 percent, weaker than an expected 1.7 percent. At the same time, August durable goods tumbled 13.2 percent, much more than the 5 percent drop expected.
"You put it all together, a lot of this is backward looking data, some of this is more forward looking. It's certainly a negative but not a disaster," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
Pending home sales, released at 10:00 a.m. ET (1400 GMT), fell 2.6 percent in August, compared with expectations for flat growth. The news follows Wednesday's report on new home sales, which were also weaker than expected. Equities were not impacted by the data.
The Dow Jones industrial average <.DJI> was up 41.97 points, or 0.31 percent, at 13,455.48. The Standard & Poor's 500 Index <.SPX> was up 4.67 points, or 0.33 percent, at 1,437.99. The Nasdaq Composite Index <.IXIC> was up 6.92 points, or 0.22 percent, at 3,100.62.
In China, stocks rebounded from multi-year lows on speculation the China Securities Regulatory Commission would announce steps to support beleaguered domestic markets which could include changes to the initial public offering market. Traders said China's central bank fed $57.9 billion into money markets this week, the largest weekly injection in history.
China's securities regulator will hold a regular meeting on Thursday, but reforming the system for initial public offers is not on the agenda, a regulatory source told Reuters.
The news on possible steps by China lifted energy shares <.GSPE> 0.8 percent and financials <.GSPF> 0.7 percent on expectations the measures would boost U.S. demand and growth. Among the most active, Bank of America Corp rose 2.5 percent to $9.04 and Consol Energy added 3.4 percent to $30.30.
Also helping financials was Discover Financial Services , which rose 2.9 percent to $38.10 after reporting third-quarter earnings that beat expectations.
The world economy has been relying on China's growth to offset weakness in the United States and Europe. While the U.S. has shown signs of recovery and the Federal Reserve recently announced measures to support markets, slowing growth in China has been a concern, especially with Europe's debt crisis still in focus.
Spain is set to announce economic reforms and a 2013 budget on Thursday. The tension in Europe, underlined by anti-austerity measures in Madrid and Athens, contributed to the S&P's 1.9 percent drop over the past five days. Analysts said investors may look for U.S. stocks offering value after the recent declines.
Hewlett-Packard Co fell 1.1 percent to $16.93 after Jefferies downgraded the Dow component to "underperform," expecting continued problems in its personal computer segment.
Tempur-Pedic International Inc agreed to buy rival mattress maker Sealy Corp for about $242 million and assume about $750 million in debt. Tempur shares surged 17 percent to $31.41 while Sealy rose 4.7 percent to $2.24.
The S&P 500 is up 5.2 percent so far for the third quarter and 1.9 percent for September, historically a weak month for equities. Gains were largely tied to economy-boosting actions taken by the U.S. Federal Reserve and European Central Bank.
(Additional reporting by Chuck Mikolajczak; Editing by Bernadette Baum)