Manufacturing Data Lift Dow, But Europe Weighs

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A considerably better-than-expected regional manufacturing report helped pull the Dow into positive territory, but gains were restrained by other gloomier data, and continued anxiety over the debt crisis in Europe.

Today's Markets

As of 10:08 a.m. ET, the Dow Jones Industrial Average climbed 33.8 points, or 0.29%, to 11,537, the S&P 500 rose 2.5 points, or 0.21%, to 1,212, and the Nasdaq Composite fell 9.6 points, or 0.37%, to 2,594.

Trading has been particularly volatile over the past two weeks; indeed, the Dow has closed in opposing directions for nine-straight sessions.  The blue-chip index is 0.63% in negative territory as of Wednesday's close, but has been teetering on the breakeven point for the year.

Several key economic reports were released on Thursday.

The manufacturing sector unexpectedly expanded in the mid-Atlantic region in early October. The Philadelphia Federal Reserve's manufacturing gauge jumped to 8.7 from -17.5.  Reading above 0 point to expansion, while those below 0 point to contraction.

Sales of previously occupied homes fell 3% in September from August to a seasonally adjusted annual rate of 4.91 million homes, a bigger drop than the 2% economists anticipated.  The housing market has struggled with a glut of supply, depressed prices, and still-tight consumer lending conditions.

New claims for unemployment benefits fell to 403,000 from 409,000 the week prior, but checked in higher than the 400,000 economists had been expecting.  Claims have been hovering about the 400,000 level for months, and represent one of many gauges that suggest the labor market is still struggling.

Earnings in Focus

Earnings season is in full swing with almost half of all Dow components and more than 20% of the S&P 500 reporting this week.

American Express (NYSE:AXP) posted earnings that topped expectations, and sales that met forecasts. AT&T's (NYSE:T) quarterly revenue missed analysts' expectations, while its bottom-line matched estimates.

Technology heavyweight Microsoft (NASDAQ:MSFT) is set to report after the closing bell.

Also on the corporate front, Silver Lake Partners, Microsoft and others are working on a bid for struggling technology firm Yahoo! (NASDAQ:YHOO), the Wall Street Journal reported

European Angst

"The European sovereign debt crisis affects investors everywhere."

- HSBC Global Research

Market participants are paying close attention to Europe, where policymakers are struggling to craft a unified solution to tackle the 17-member currency bloc's debt crisis.  A report from the Journal suggesting the European bailout fund, called the European Financial Stability Facility, would only be able to provide first-loss insurance on sovereign debt instead of direct guarantees spooked traders worldwide, pushing global shares into the red.  The Journal also said the EFSF may not be able to use bonds it buys as collateral to borrow from the European Central Bank.  Both of those developments, economists say, limit the power of the EFSF.

"The European sovereign debt crisis affects investors everywhere," analysts at HSBC wrote in a research note, adding the crisis is "hugely complex."

Officials are expected meet on October 23, but it remains unclear whether a firm solution will come out of that meeting. Additionally, Dow Jones Newswires reported on Thursday morning that the summit may be delayed as Germany's parliament negotiates what its role would be in a potential bailout fund.

The euro fell 0.02% to $1.37, while the dollar was unchanged against a basket of world currencies.  European shares were roughly 1.6% to the downside.

Energy markets moved to the upside on the back of the better-than-expected manufacturing report.  Light, sweet crude rose 13 cents, or 0.15%, to $86.24 a barrel.  Wholesale RBOB gasoline gained 2 cents, or 0.82%, to $2.69 a gallon.

In metals, gold dropped $19.40, or 1.2%, to $1,628 a troy ounce. Silver climbed 3 cents, or 0.12%, to $31.30 a troy ounce.

Yields on government debt were slightly higher.  The benchmark 10-year Treasury note yielded 2.205% from 2.164%.  Bond yields move in the opposite direction of prices.

Foreign Markets 

The Euro Stoxx 50 fell 1.6% to 2,294, the English FTSE 100 slid 0.82% to 5,406, and the German DAX dipped 1.9% to 5,800.

In Asia, the Japanese Nikkei 225 dropped 1% to 8,682 and the Chinese Hang Seng tumbled 1.8% to 18,983.