U.S. stocks closed narrowly mixed, attempting to extend a recovery as investors eyed fluctuations in oil prices and awaited the final jobs report before the Federal Reserve's key September meeting. (Tweet This)
"I do think today's market is the market traders don't want to be in long because it could be very choppy if these numbers are indicative of a labor force that is expanding," said Quincy Krosby, market strategist at Prudential Financial.
Friday's nonfarm payrolls report is the last monthly employment report before the Federal Reserve meets in two weeks, when an announcement on interest rates is widely anticipated.
Stocks gave up much of opening gains to dip into negative territory in intraday trade.
The Nasdaq composite failed to hold higher and joined the other major averages in the red for 2015. Apple closed down 1.75 percent.
The S&P 500 and Dow Jones industrial average ended about 0.10 percent higher. Earlier, the blue chip index gained as much as 198.69 points in a failed attempt to stay out of correction territory, with Goldman Sachs and IBM among the top contributors to gains.
"We're still in the midst of this correcting process where equities aren't being transitioned into stronger hands," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
"That lends to this intraday rally and decaying until we have selling exhaustion (to the point) that we don't see that decaying that we're seeing at the moment," he said, noting some traders taking profits ahead of Friday's jobs report.
The energy sector struggled to hold gains after earlier spiking more than 2 percent on a surge in oil prices. Crude briefly turned negative in afternoon trade before settling up 50 cents, or 1.08 percent, at $46.75 a barrel.
On Wednesday, the S&P 500 and Nasdaq composite closed out of correction territory to within 10 percent of their 52-week highs. The major averages are still on track for weekly losses of nearly 2 percent.
"The key focus on today's trade is we're still rebounding. We strengthened into the close yesterday," said Art Hogan, chief market strategist at Wunderlich Securities. "China being closed helps with (alleviating) pressure and downside volatility."
Energy prices have seen extreme moves in the last few days. Crude gained support with the overnight recovery in Asian stocks and briefly leaped 4 percent in morning trade to top $48 a barrel. Brent also temporarily topped $52 a barrel.
"The fact that we're not seeing extraordinarily wider gyrations out of Asia is also a plus for the market," said Peter Cardillo, chief market economist at Rockwell Global Capital. "I think oil prices right now are the best indicator for equity markets until the FOMC meeting."
Asian stocks mostly recovered on Thursday with the Nikkei up 0.5 percent helped by a positive finish on Wall Street overnight. Trading was relatively calm compared to previous sessions as Chinese stock exchanges closed for the commemoration of the end of World War II. Mainland Chinese stock markets will reopen Monday, while the Hong Kong's Hang Seng reopens Friday.
European stocks closed sharply higher, with the German DAX ending up 2.7 percent, following comments from ECB President Mario Draghi that kept quantitative easing unchanged while raising the cap on the amount of any one issue it could buy to 33 percent from 25 percent.
Before the market open, the European Central Bank also decided to keep interest rates unchanged and downgraded its inflation forecast.
U.S. futures briefly more than doubled gains as investors digested Draghi's comments and morning data releases.
"He certainly seems very dovish right now. More stimulus could come," said Nick Raich, CEO of The Earnings Scout. "That's certainly helping European markets and we're following suit."
"Most certainly today it's Draghi and tomorrow the employment report," he said.
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The came in at 59.0, above expectations and a touch below the nearly 10-year high of July's 60.3 read.
"Bottom line, as seen in other areas of the world, the services side of the economy is performing much better than manufacturing as its less susceptible to the violent FX volatility that many multinationals are seeing," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.
He added that with Treasury yields little changed after the report, the focus is firmly on Friday's jobs data.
Read More Why can't every day be Jobs Friday?
Minor data out Thursday continued to indicate moderate growth. Weekly jobless claims rose to 282,000. The overall U.S. July trade gap narrowed to $41.86 billion, the smallest in five months, while the U.S.-China trade deficit in July increased slightly to $31.58 billion from $31.46 billion in June, Reuters reported.
The Challenger, Gray & Christmas jobs cut report showed that job cuts announced by U.S.-based companies plummeted 61 percent in August after rising to a four-year high the previous month.
The U.S. dollar spiked to its highest since Aug. 19, with the euro weaker near $1.11 after hitting a low of $1.1086. Treasury yields held little changed, with the 10-year yield near 2.16 percent and the at 0.70 percent.
U.S. stocks closed sharply higher on Wednesday, partly recovering from the worst start to a September in 13 years, as investors eyed calmer global markets, domestic data, and oil prices.
"The S&P futures are filling a gap on their 30-minute chart with this morning's rally. This is a positive development that could allow for a stronger finish to this week than Monday and Tuesday's action suggested. However, resistance is somewhat formidable on an intraday basis, so we expect continued near-term volatility as the bottoming process unfolds," Katie Stockton, chief technical strategist at BTIG, said in a morning note.
Stocks in focus include Tesla, which closed down 0.9 percent. CEO Elon Musk tweeted after the market close Wednesday that the electric car maker will begin taking pre-orders in March for its entry-level Model 3, which will start at $35,000.
Twitter jumped 1.7 percent. The social media firm's board meets Thursday and focus will be on whether the company will make any announcement on the selection of a new chief executive officer. Twitter co-founder Jack Dorsey became interim CEO in June after the surprise resignation of CEO Dick Costolo.
Raich noted the only S&P 500 name left to report second-quarter earnings is Kroger, scheduled for Friday, Sept. 11.
"The earnings season came to a close (much) like the first quarter. Better-than-expected earnings but sales were a little light. I think that's a reflection of the global growth slowdown," he said.
The closed up 2.26 points, or 0.12 percent, at 1,951.12, with telecommunications leading eight sectors higher and health care and information technology the greatest decliners.
The Nasdaq closed down 16.48 points, or 0.35 percent, at 4,733.50, down 0.05 percent for 2015.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 25.
About two stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 838 million and a composite volume of 3.4 billion in the close.
Gold futures settled down $9.10 to $1,124.50 an ounce.
On tap this week:
Earnings: Cooper Cos.
9 p.m.: Minneapolis Fed President Kocherlakota speaks at forum in Missoula, Montana.
8:10 a.m.: Richmond Fed President Lacker speaks on the case against further delay
8:30 a.m.: Nonfarm payrolls
3 p.m.: Treasury Strips
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