NEW YORK (CNNMoney) -- U.S. stocks pared earlier losses and ended mixed Thursday, as investors grew hopeful that interest rate cuts from China and Europe, along with tepid U.S. economic data, could bring more meaningful central bank action.
The Dow Jones industrial average () lost 47 points, or 0.4%, and the S&P 500 ( ) lost 6 points, or 0.5%, while the Nasdaq ( ) finished barely in positive territory. Earlier, the three major indexes were down between 0.6% and 0.8%.
Financial stocks were among the worst performers. Goldman Sachs (Fortune 500), Morgan Stanley ( , Fortune 500), Bank of America ( , Fortune 500), Citigroup ( , Fortune 500) and JPMorgan Chase ( , Fortune 500) all finished in the red.,
Thursday was a big day for central bank intervention. The European Central Bank lowered its key interest rate by a quarter percentage point to 0.75%. Meanwhile, the Bank of England increased asset purchases by £50 billion ($78.1 billion) and the People's Bank of China cut several key interest rates for the second time in less than a month. China's central bank brought its lending rate down by 0.31 percentage points to 6%.
Analysts attribute the turnaround to investors' hope that today's stimulus measures are a sign of things to come.
"The market is bidding on the notion that further quantitative easing is likely underway, not only on an international basis but in the United States, as well," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
On the domestic front, three reports released on Thursday suggested a pick up in the U.S. labor market.
About 374,000 people filed for first-time unemployment benefits last week, 14,000 fewer than the week before, the Labor Department reported.
Companies also announced fewer layoffs in June, according to data collected by Challenger, Gray & Christmas, Inc. Employers announced 37,551 planned job cuts, the lowest number in 13 months, the report said.
Additionally, a report released by payroll-processing company ADP beat expectations and showed that private businesses added 176,000 jobs in June, a significant improvement over the month before. The ADP report typically foreshadows the Labor Department's jobs report, which will come out Friday.
U.S. stocks rallied on a holiday-shortened trading day Tuesday, as investors reacted to strong auto sales and an increase in factory orders for May. U.S. markets were closed Wednesday for Independence Day.
World markets: European stocks closed mixed on Thursday. Britain's FTSE 100 ( ) was up 0.1%, while the DAX ( ) in Germany slid 0.5% and France's CAC 40 ( ) dropped 1.2%.
Asian markets ended mixed. The Shanghai Composite () lost 1.2% and Japan's Nikkei ( ) slid 0.3%, while the Hang Seng ( ) in Hong Kong rose 0.5%.
Economy: The non-manufacturing index dipped to 52.1 in June, according to the Institute of Supply Management's monthly report -- down from 53.7 in May and below expectations. Any reading above 50 indicates expansion.
Mortgage rates fell again this week, smashing previous record lows, according to mortgage giant Freddie Mac. The rate for a 30-year, fixed-rate loan dropped 0.04 percentage points to 3.62%. The 15-year fixed fell 0.5 percentage points to 2.89%.
Companies: Several large retailers reported mixed results for sales in June. Retailers battled high unemployment, falling consumer confidence and warm weather purchases that were made earlier than usual this year.
Of the retailers tracked by Thomson Reuters, 18 are expected to report a 2.4% gain in June same-store sales -- far less than the 7.7% gain from a year earlier.
But it wasn't all bad news -- off-price retailers reported good numbers. TJX Cos Inc (Fortune 500), which runs the discount chain T.J. Maxx, and Ross Stores Inc ( , Fortune 500) reported some of the largest gains, as shoppers looked for bargains on higher-end clothes and home goods.,
Oil for August delivery fell 44 cents, settling at $87.22 a barrel.
Gold futures for August delivery settled down $12.40 to $1,609.40 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 1.60% from 1.63% late Tuesday.
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