updated 3/16/2004 8:14:55 AM ET 2004-03-16T13:14:55

Investors bought technology shares Thursday, but made few other investments ahead of Friday’s February jobs report, leaving stocks mixed in another lethargic day on Wall Street.

Major Market Indices

The market’s major indexes drifted in and out of positive territory as they have for much of the week ahead of Friday’s employment report. The report, showing the number of new jobs created or lost during the month, is considered one of the most critical indicators of the economy’s health.

“There’s been a lot of speculation about where the number might come in and how the market might react, so it makes sense for this to be a bit of a directionless day,” said Brian Pears, head equity trader at Victory Capital Management in Cleveland.

The Dow Jones industrial average, which traded in a narrow, 45-point band, closed Thursday down 5.11 points, essentially flat at 10,588.00. Broader stock gauges closed the day higher.

The tech-rich Nasdaq composite index advanced 21.75 points, or 1.1 percent, to 2,055.11, boosted by the semiconductor sector and finishing higher after two down days. The Standard & Poor’s 500-stock index closed up 3.84 points, or 0.3 percent, at 1,154.87.

Traders, who have traded listlessly for weeks waiting for galvanizing economic or earnings data, were disappointed again Thursday.

They seemed put off by a Commerce Department report that orders to U.S. factories fell by 0.5 percent in January. Weaker demand for transportation equipment, especially airplanes, pulled the overall number down. Excluding transport, factory orders rose 1.4 percent.

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But there was some upbeat news: The number of new applications filed for unemployment benefits declined more than expected last week, the Labor Department said. The reading, considered an indicator of the level of layoffs, was seen as a sign that companies are feeling more confident about the economy.

Separately, the department said productivity of American workers grew at a modest 2.6 percent annual rate during the final three months of 2003. The reading matched analyst forecasts, but was slightly slower than the 2.7 percent pace estimated by the government last month.

The lack of significant employment growth has been a sticking point in the recovery. Although companies seem to be laying off fewer workers, they haven’t been in a rush to hire people back. Still, a Federal Reserve survey released Wednesday found jobs are growing, albeit slowly, and economists remain optimistic about the outlook.

The change in non-farm payrolls will be the most-closely watched component of Friday’s jobs report; economists are expecting an increase of 125,000 jobs. If the number comes in higher, the market could rally, but a very strong reading could revive worries about pending interest rate hikes, and spark a sell-off. Most analysts discounted this, however, saying better jobs numbers are essential to the ongoing recovery.

“There may be some concern that the Fed will start to act, but the natural response to that is, ’Well, let’s hope so!”’ said John Caldwell, chief investment strategist for McDonald Financial Group. “An environment that would drive the Fed to lower rates again is much more scary than a sustainable economic recovery with jobs growth.”

Walt Disney Co. was up 15 cents at $26.80 after the company’s board voted to strip the title of chairman from chief executive Michael Eisner, who has been blamed for poor stock performance.

The board reiterated its support of Eisner’s management team, and he is expected to stay on to fight a hostile takeover bid from Comcast Corp. Comcast, which has refused to raise its offer, rose 31 cents to $30.71.

Also among gainers on the Dow, pharmaceutical maker Merck & Co. surged 67 cents to $47.78 after reaffirming its earnings forecast for the first-quarter and the year.

Many big retailers have reported strong sales for February, as spring fashions and warmer weather lured customers. Dow component Wal-Mart Stores Inc., the world’s largest retailer, added 69 cents to $61.05, and Target Corp. gained 18 cents to $43.77; each reported better-than-expected sales.

Advancing issues outnumbered decliners about 3 to 2 on the New York Stock Exchange. Volume was light. The Russell 2000 index, which tracks smaller company stocks, closed the day up 7.02 points, or 1.2 percent, at 598.34.

Overseas, Japan’s Nikkei average finished 0.4 percent higher Thursday. In Europe, France’s CAC-40 gained 0.5 percent, Britain’s FTSE 100 added 0.8 percent and Germany’s DAX rose 1.5 percent.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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