* U.S. factory sector contracts; jobless claims fall
* Nordstrom jumps after profit beat
* Boeing (NYSE:BA) rises; Reuters reports move to increase 737 MAX
production
* Dow rises 0.19%, S&P drops 0.05%, Nasdaq falls 0.34%
(Updates to late afternoon, changes byline, adds NEW YORK to
dateline)
By April Joyner
NEW YORK, Aug 22 (Reuters) - The benchmark S&P 500 struggled
for direction on Thursday as strong results from Nordstrom Inc (NYSE:JWN)
JWN.N and a fall in U.S. jobless claims offset data showing a
contraction in U.S. manufacturing activity.
Stocks initially rose at the market open as shares of
Nordstrom jumped after the department store's quarterly profit
beat estimates, joining Target Corp (NYSE:TGT) TGT.N and Lowe's Cos Inc
LOW.N in delivering upbeat retail numbers. Nordstrom shares
were last up 16.1%. Data from the U.S. Labor Department, which showed initial
claims for state unemployment benefits dropped more than
expected last week, pointed to a robust job market and a strong
underpinning for consumer activity. By contrast, IHS Markit's Flash Purchasing Managers' Index
showed manufacturing activity contracting in August for the
first time in nearly a decade. The reading prompted concern
among some investors that economic weakness abroad and an
escalating trade war with China could drag down the U.S.
economy. Following the data release, the yield curve between
two-year and 10-year Treasury notes briefly inverted.
"The fact that manufacturing didn't just slow down but
contracted, that was a little surprising," said Oliver Pursche,
chief market strategist at Bruderman Asset Management in New
York.
Yet, Pursche said, "You had decent unemployment claims, they
were slightly better than expected, so that's a counter act.
That's why we don't expect there to be any kind of deep
recession."
The Dow Jones Industrial Average .DJI rose 49.37 points,
or 0.19%, to 26,252.1, the S&P 500 .SPX lost 1.44 points, or
0.05%, to 2,922.99 and the Nasdaq Composite .IXIC dropped
27.02 points, or 0.34%, to 7,993.19.
The Dow received a boost from Boeing Co BA.N shares, which
rose 4.2% as Reuters reported that the planemaker is looking to
increase production of its grounded 737 MAX jets as early as
October, suggesting the aircraft's return to service may be on
track for the fourth quarter. Federal Reserve Chair Jerome Powell's scheduled speech on
Friday at an annual gathering of central bankers in Jackson
Hole, Wyoming, remained in focus. Several market strategists
said they expected market activity to be muted on Thursday as
investors awaited clues on the U.S. central bank's course of
monetary policy.
"The market is pausing as investors are waiting for big news
tomorrow on Chairman Powell's speech," said James Ragan,
director of wealth management research at D.A. Davidson in
Seattle.
In interviews on Thursday, Philadelphia Fed President
Patrick Harker and Kansas City Fed President Esther George
hinted at less dovish stances. George said she does not yet see
a signal of a downturn in the U.S. economy, while Harker said he
does not see the case for additional stimulus. Stocks moved
lower following Harker's comments. Declining issues outnumbered advancing ones on the NYSE by a
1.04-to-1 ratio; on Nasdaq, a 1.23-to-1 ratio favored decliners.
The S&P 500 posted 39 new 52-week highs and four new lows;
the Nasdaq Composite recorded 58 new highs and 54 new lows.