U.S. stock indexes finish mixed after early rally fades

Major U.S. stock indexes ended mixed Thursday after an early rally lost its strength toward the end of the day.

The S&P 500 managed to hold on to a tiny gain that extended its winning streak to a third day. The benchmark index, which is within 0.7% of its all-time high set July 26, ended the day slightly down for the week.

Gains in health care, technology, utilities and other sectors outweighed losses elsewhere in the market Thursday. Advancers outnumbered decliners on the New York Stock Exchange. Bond yields were little changed.

The market rallied in the early going as investors weighed a batch of encouraging economic reports. The positive data reinforces the outlook from the Federal Reserve, which projects slower economic growth, but not a recession.

On Wednesday, the Fed reduced its benchmark interest rate for the second time this year in a bid to keep the economy from stalling in the face of slowing economic growth overseas and uncertainty over the U.S.-China trade war.

Fed officials were sharply divided in their outlook for future interest rate policy. As a result, the central bank didn't indicate clearly whether more rate cuts were likely this year. Still, Fed officials left the door open for additional rate cuts if the economy weakens.

"That's a nuanced message that markets are beginning to feel comfortable with," said Kate Warne, chief investment strategist at Edward Jones. "And the fact that the economic data today was a little better than expected is reassuring, as opposed to worrisome, in an environment where there's a lot of variation among voting members (of the Fed)."

The S&P 500 index rose 0.06 points, or less than 0.1%, to 3,006.79. The Dow Jones Industrial Average gave up an early gain, sliding 52.29 points, or 0.2%, to 27,094.79. The Russell 2000 index of smaller company stocks also relinquished an early gain, losing 6.87 points, or 0.4%, to 1,561.47.

The Nasdaq squeaked out a gain of 5.49 points, or 0.1%, to 8,182.88.

Bond prices were little changed. The yield on the 10-year Treasury held at 1.78%.

Traders were encouraged Thursday by new economic snapshots, including data indicating U.S. home sales rose sharply last month and an index of manufacturing activity that came in ahead of analysts' forecasts. In addition, applications for U.S. unemployment aid edged higher last week, but still totaled less than what economists projected.

Recent data suggests the U.S. job market is solid, wages are rising, consumers are still spending and even such sluggish sectors as manufacturing and construction have shown signs of rebounding. Still, investors have been trying to gauge how the economy will fare amid a slowdown in economies overseas and uncertainty over the trade war between the U.S. and China.

The Fed's outlook for the U.S. economy, and that of corporations, has been clouded this year as the trade conflict between the world's two biggest economies has escalated and multiple attempts at negotiating a resolution have failed.

Markets have rallied this month after the U.S. and China took steps to ease tensions in advance of talks next month. That's fueled speculation among investors that the two countries may at least reach an interim deal in their costly trade conflict.

"A lack of escalation or potential de-escalation would be something that would be viewed positively by the markets," said Bill Northey, senior investment director at U.S. Bank Wealth Management.

Washington and Beijing were set to begin trade talks Thursday ahead of more formal negotiations set for next month.

Meanwhile, France's finance minister said Europe is ready to impose retaliatory tariffs next year on U.S. goods as part of a long-running dispute over subsidies to plane makers Airbus and Boeing.

Merck & Co. was a big winner among health stocks Thursday, rising 1.1%. Microsoft climbed 1.8% after the software giant boosted its quarterly dividend and approved a $40 billion stock buyback. Sempra Energy added 1.1% to lead the gainers in the utilities sector.

Financial and industrial stocks were among the losers. Regions Financial slid 1.4% and Southwest Airlines dropped 2%.

Energy stocks, which rallied earlier in the week as crude oil prices soared following an attack on key oil facilities in Saudi Arabia, also declined. Hess slid 2%.

Several homebuilders rose after the National Association of Realtors said that sales of previously occupied U.S. homes climbed last month to a seasonally adjusted annualized rate of 5.49 million units, the best performance since March 2018. Sales have increased 2.6% from a year ago. Hovnanian Enterprises gained 3.6%.

U.S. Steel sank 11.2% after it warned investors that its third quarter loss will be wider than anticipated.

Darden Restaurants fell 5.1% after the owner of the Olive Garden and other restaurant chains reported first quarter results that disappointed investors. The company's earnings topped Wall Street's forecasts, but other performance metrics lagged amid weaker sales at some of Darden's chains.

Benchmark U.S. crude inched up 2 cents to settle at $58.13 a barrel. It's up 6.3% this week. Brent crude, the international standard, rose 80 cents to close at $64.40.

Wholesale gasoline rose 4 cents to $1.70 per gallon. Heating oil climbed 3 cents to $2.00 per gallon. Natural gas fell 10 cents to $2.54 per 1,000 cubic feet.

Gold fell $9.10 to $1,498.40 per ounce, silver fell 3 cents to $17.77 per ounce and copper fell 1 cent to $2.59 per pound.

The dollar fell to 107.97 Japanese yen from 108.35 yen on Wednesday. The euro strengthened to $1.1052 from $1.1032.

Major stock indexes in Europe finished mostly lower. Indexes in Asia were mixed.