NEW YORK — The stock market is clinging to its recent rally, overcoming early losses and moving slightly higher.
The Dow Jones industrial average extended its gains into an eighth day, rising about 50 points in afternoon trading, after earlier giving up as much as 84 points. Other major indexes also reversed early losses and trudged higher.
Sharp gains in some financial and industrial stocks helped turn the market around, overcoming losses in energy and technology companies.
Still, trading lacked enthusiasm, as it has over the past week, with investors shying away from making greater commitments to stocks.
With many traders on vacation, volume has been extremely light, adding to the market's recent choppiness. And the day's economic news, including a slightly smaller-than-expected dip in initial unemployment claims and a fairly benign reading on gross domestic product, did little to excite investors.
Analysts say the market has been running on its own momentum more than anything else, adding that a lot of the improving economic data has already been priced into stocks.
A lot of the activity has also been driven by short-covering, analysts say, which tends to magnify the market's gains. Short-covering is where investors have to buy stock after having earlier sold borrowed shares in a bet they would fall. Traders have been anticipating a pullback in stocks for weeks, but any dips in the market continue to be met with more buying.
"There is just too much cash sitting on the sidelines," said Phil Orlando, chief equity market strategist at Federated Investors.
The Dow rose 53.28, or 0.6 percent, to 9,596.80. The Standard & Poor's 500 index rose 4.04, or 0.4 percent, to 1,032.16, while the Nasdaq composite index rose 2.41, or 0.1 percent, to 2,026.84.
About four stocks rose for every three that fell on the New York Stock Exchange, where volume came to a light 768.8 million shares, compared with 712 million at the same time on Wednesday.
In other trading, the Russell 2000 index of smaller companies rose 0.48, or 0.1 percent, to 584.50.
On Thursday, the Labor Department said first-time jobless claims fell 10,000 last week to 570,000, just shy of economists' expectations for 565,000.
Workers continuing to file for benefits, however, fell more than expected, declining to 6.13 million from 6.25 million in the previous week. It was the lowest level for continuing claims since early April.
Meanwhile, a Commerce Department report showed the nation's economy shrank at a 1 percent annualized rate in the second quarter. The updated figure was unchanged from an earlier, preliminary reading on the nation's gross domestic product, which measures the value of all goods and services produced within the U.S. Economists were expecting GDP to be revised to a 1.5 percent decline.
Gains in some troubled financial stocks helped to offset the market's losses. Shares of American International Group Inc. surged nearly 30 percent, rising $11.25 to $48.94. AIG shares have more than doubled in eight days.
CIT Group Inc. jumped 14.1 percent, adding 18 cents to $1.45. Citigroup Inc. rose 42 cents, or 9.1 percent, to $5.05.
Financials have been some of the most susceptible stocks to short-covering.
Boeing Co. rose after saying its long-delayed 787 aircraft will be ready for its first flight by the end of this year. Shares jumped $4.11, or 8.6 percent, to $51.93.
Bond prices mostly fell even after a strong auction of seven-year notes.
The yield on the benchmark 10-year Treasury note rose to 3.48 percent from 3.44 percent late Wednesday.
Oil prices also reversed early losses, rising $1.22 to $72.65 a barrel on the New York Mercantile Exchange.
The dollar was mixed against other major currencies, while gold prices inched higher.
Overseas, Asian stocks fell after China said it would cut investment in some industries. Japan's Nikkei stock average lost 1.6 percent, while China's main index fell 0.7 percent.
Britain's FTSE 100 fell 0.4 percent, Germany's DAX index fell 0.9 percent, and France's CAC-40 lost 0.5 percent.