Stocks inch up ahead of jobs report

NEW YORK (CNNMoney.com) -- Stocks managed slim gains Thursday, recovering from early declines, but any advance was limited ahead of Friday's big monthly jobs report.

The Dow Jones industrial average (Charts) ended a few points higher. The broader S&P 500 (Charts) index and the tech-fueled Nasdaq composite (Charts) both gained around 0.2 percent.

Stocks had inched lower in the morning as investors mulled weak reports on the labor market and manufacturing sector. But the tone improved as the session wore on.

Treasury prices rose, lowering the corresponding yields. Oil and gold prices rose.

After the close, Research in Motion (Charts) reported higher quarterly earnings and revenue that beat expectations and boosted its current-quarter profit forecast. However, investors took a '"sell the news" reaction, sending shares more than 7 percent lower in extended-hours trading.

Also after the close, Alcoa said it will sell two of its divisions and that it will restructure another one. Shares of the Dow component slipped 1 percent in extended-hours trading.

Stocks have drifted this week since Monday's big rally, in which the Dow ended at an all-time high of 14,087.55. That advance followed several up weeks, in which investors continued to welcome the Federal Reserve's decision to cut interest rates in September, for the first time in four years.

With the focus on monetary policy and what the Fed might do at its next FOMC meeting at the end of the month, investors hesitated to place bets ahead of Friday's important monthly jobs report.

"It's a complete wait for tomorrow to see what the employment numbers are," said Todd Clark, director of stock trading at Nollenberger Capital Partners Inc. in San Francisco.

Economists expect employers added around 100,000 jobs to their payrolls in September, after reporting a drop in payrolls in August of 4,000. The unemployment report, generated by a different survey, is expected to have risen to a 4.7 percent annualized rate from a 4.6 percent rate in August.

A much stronger-than-expected report might upset Wall Street in that it would raise bets that the Fed can't keep cutting rates, but a much weaker report would raise worries about a recession.

A report that was slightly weaker would probably help stocks the most, as it would reassure investors that the economy is holding up OK, but that the Fed still has room to cut rates.

"This is going to have to be a just right, Goldilocks number," said Clark.

Ahead of the monthly report, the weekly jobs report showed that the number of Americans filing new claims for unemployment surged, although the four-week moving average only edged up slightly.

Another report showed a bigger-than-expected drop in August factory orders. Orders fell 3.3 percent in the month, the biggest drop in seven months due to broad weakness in the manufacturing sector.

Market breadth was positive. On the New York Stock Exchange, winners beat losers 5 to 3 on volume of 810 million shares. On the Nasdaq, advancers topped decliners 8 to 7 on volume of 1.33 billion shares.

In corporate news, Sprint Nextel (Charts, Fortune 500) CEO Gary Forsee is reportedly feeling the pressure from activist investor Ralph Whitworth, according to a Wall Street Journal story. Shares rose nearly 3 percent on bets that this could mean the company may revamp its strategy or make other changes that could improve results.

Intel (Charts, Fortune 500) and Micron Technology (Charts, Fortune 500) were among the chip makers sliding for a second session.

NutriSystem (Charts) slumped 32 percent in unusually active Nasdaq trade after the company warned that third-quarter earnings won't meet estimates.

A few companies are beginning to report quarterly results, but the bulk of earnings news won't be delivered until the middle of the month.

Earnings for the third quarter are expected to have grown at the slowest pace in five years, according to Thomson Financial estimates. The tepid growth is a reflection of the slower-growing economy, the impact from the mortgage market fallout and the tough comparisons versus a year ago.

However, the advantage of low expectations is that it won't be hard for corporations to leave Wall Streeters pleasantly surprised by the results.

"I think the third-quarter earnings will be stronger than what many people think, with maybe the exception of the financial sector," said Robert Philips, CEO at Walnut Asset Management in Philadelphia.

In global trade, markets in Europe finished mixed after the European Central Bank and the Bank of England opted to hold interest rates steady, but said they remained worried about inflation. Asian markets ended lower.

In currency trading, the dollar gained versus the euro after the interest rate decision.

Oil prices reversed course, turning higher. U.S. light crude for November delivery rose $1.50 to settle at $81.44 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery rose $8.10 to settle at $743.80 an ounce.

Treasury prices inched higher, lowering the yield on the 10-year note to 4.51 percent from 4.56 percent late Wednesday. Bond prices and yields move in opposite directions.