US: Wall Street rises in volatile session ahead of jobs data

[NEW YORK] US stocks ended slightly higher on Thursday as investors, on edge after recent turmoil in China's markets, looked toward a key US jobs report that may figure in the Federal Reserve's decision about when to lift interest rates.

Major US indices at one point rose strongly over 1 per cent but relinquished those gains to dip into negative territory as worries about China's economy weighed on traders' minds, though the Dow Jones industrial average and S&P 500 managed to hold on to end modestly higher.

It was the second consecutive day of increases after over two weeks of China-driven market turmoil that has left the S&P 500 down 9 per cent from its all-time high in May. "After a waterfall decline like we had over a week ago, you can have violent moves both up and down," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. "That's a little of what we're seeing now as well as positioning in advance of the jobs number tomorrow." European Central Bank chief Mario Draghi hinted at additional stimulus measures for the euro zone, helping drive Wall Street's early gains.

His remarks came a day ahead of the monthly US nonfarm payrolls data, which is expected to show that the economy added 220,000 nonfarm jobs in August, up from 215,000 in July.

The combination of a healing US labour market and worries about a stumbling Chinese economy are challenging the Fed as it heads into a policy meeting on Sept 16-17 at which it may raise interest rates for the first time since 2006.

Near-zero rates have allowed the US stock market to stage a spectacular bull-run since the financial crisis. But the market was rocked by volatility in the past two weeks, triggered by fears of slowing growth in China.

Some investors believe the market volatility, which left the S&P 500 with its biggest monthly drop in three years in August, may lead the Fed to delay a rate hike until the end of the year.

The CBOE Volatility index, known as Wall Street's "fear gauge", fell 2.11 per cent to 25.54, slightly above the long-term average of 20. The index spiked as high as 53.29 early last week.

The Dow Jones industrial average rose 0.14 per cent to 16,374.76 and the S&P 500 gained 0.12 per cent to 1,951.13 points. The Nasdaq Composite ended 0.35 per cent lower at 4,733.50.

Eight of the 10 major S&P sectors were higher, with the telecommunications index's 0.77 per cent rise leading the advancers.

Apple was the biggest drag on S&P 500 with a 1.75 per cent drop while Exxon Mobil's 0.76 per cent gain helped push the index higher.

Joy Global's shares were down 14.60 per cent after the mining equipment maker reported a fall in quarterly profit and cut its full-year forecast.

Caterpillar also fell 2.1 per cent and was the biggest drag on the Dow.

Advancing issues outnumbered decliners on the NYSE by 1,964 to 1,066. On the Nasdaq, 1,434 issues rose and 1,363 fell.

The S&P 500 index showed no new 52-week highs and one new low, while the Nasdaq recorded 30 new highs and 42 new lows.

Volume was lighter than in recent days. About 7.1 billion shares traded on US exchanges, compared to an average of 8.5 billion in the past five sessions, according to BATS Global Markets.

REUTERS