NEW YORK Wall Street traded mixed Thursday as investors struggled to discern a direction for the economy after reports showing a modest increase in jobless claims and weakness in the manufacturing sector.
The data pointed to an economy that is hurting, but not experiencing as rough a time as many investors expected after the near-collapse of the mortgage market.
The Labor Department said the number of laid off-workers applying for jobless benefits rose last week by 6,000 to 371,000 near the average analyst forecast, and suggesting that the labor market remains weak but in check.
Another better-than-expected report came from the Philadelphia Federal Reserve, which said regional manufacturing activity is contracting in May more slowly than in April, and more slowly than analysts expected.
However, the Federal Reserve dealt the market a blow when it said industrial output sank for the second straight month in April. The decline of 0.7 percent, driven by big cutbacks in the automotive and other manufacturing industries, was more than double the drop analysts predicted.
The Dow Jones industrial average fell 18.81, or 0.15 percent, to 12,879.57.
Broader stock indicators were mixed. The Standard & Poor's 500 index fell 0.69, or 0.05 percent, to 1,407.97, and the Nasdaq composite index rose 1.57, or 0.06 percent, to 2,498.27.
Investors also listened to a speech by Federal Reserve Chairman Ben Bernanke in Chicago. Bernanke said he is "encouraged" by recent efforts by banks to raise cash a trend that is helping to relieve the credit crisis.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.89 percent from 3.92 percent late Wednesday.
The dollar was lower against most other major currencies, and gold prices rose.
In recent weeks, investors have been growing more optimistic recently that the economy may not be as weak as many feared, and that inflation, despite the soaring price of oil, is not out of control. But a major concern for the market is whether higher food and energy costs are hampering Americans' ability to spend.
In morning trading on the New York Mercantile Exchange, crude prices surpassed $126 a barrel, climbing back toward record levels.
And meanwhile, J.C. Penney said a pullback in consumer spending cut its first-quarter profit in half, and predicted "difficult" conditions for the entire year. Penney slipped 22 cents to $44.03.
In addition to economic data, investors waded through some deal-making news Thursday.
CBS Corp. agreed to buy online technology news and entertainment company CNet Networks Inc. for about $1.75 billion. The owner of the CBS television network and TV stations said the deal will boost its online presence and allow it to tap the growing market for online advertising.
CBS fell $1.03, or 4.2 percent, to $23.78, while CNet rose $3.41, or 43 percent, to $11.36.
General Electric Co. plans to auction off its Louisville, Ky.-based appliances business, according to The Wall Street Journal. GE has hired Goldman Sachs Group Inc. to run an auction for the appliance division, according to the newspaper, which quoted unidentified sources. The sale is seen yielding between $5 billion and $8 billion. GE slid 8 cents to $32.43.
IAC/InterActiveCorp's Ask.com has bought a stable of Internet reference sites that includes Dictionary.com in its latest effort to distinguish itself from online search leader Google Inc. and other much larger rivals. IAC/InterActiveCorp fell 22 cents to $23.51.
The Russell 2000 index of smaller companies fell 0.78, or 0.01 percent, to 735.29.
Declining issues outnumbered advancers by about 5 to 4 on the New York Stock Exchange, where volume came to 170.1 million shares.
Overseas, Japan's Nikkei stock average rose 0.94 percent. In afternoon trading, Britain's FTSE 100 rose 0.38 percent, Germany's DAX index fell 0.33 percent, and France's CAC-40 fell 0.26 percent.