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Dow Ekes Out Small Gain After Up-and-Down Session

The Dow Jones industrial average closed slightly higher Thursday, displaying jitters ahead of a critical monthly jobs report that may feed into the Federal Reserve's interest rate decision.

The Dow Jones industrial average finished up 23.38 points, or 0.11 percent, at 16,374.76. The Standard & Poor's 500 index rose 2.27 points, or 0.12 percent, to 1,966. The Nasdaq composite finished down 16.48 points, or 0.35 percent, at 4,733.50.

Friday's monthly jobs data will be the last before the Fed meets on Sept. 16-17.

The Fed has said it will raise rates when it sees sustained economic recovery. In latest look at business conditions nationwide, its Beige Book report on Wednesday, the Fed found that the economy kept expanding during the summer, driven by robust housing and auto sales.

But while the labor market has strengthened, inflation remains below the Fed's 2 percent target.

New applications for unemployment benefits rose more than expected last week, but the underlying trend remained consistent with a strengthening labor market.

Economy Continued Expanding Over Summer, Fed Says in Beige Book

In other data, U.S. trade deficit fell in July to its lowest level in five months as exports rose, signaling strength in the economy amid concerns about a global slowdown.

"I think the market is trying to calm down a little bit with the fear factor reducing somewhat and the data points to a growing U.S. economy," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. "I think the Fed raising rates in September will be a good thing for the markets because it sends the signal that the U.S. economy is capable of standing on its own two feet."

Adding to positive sentiment, the European Central Bank left interest rates unchanged, holding them at record lows as it prints money to lift the economy and raise inflation.

Near-zero rates allowed the U.S. stock market stage a spectacular bull-run since the financial crisis.

Some investors believe that the bout of recent market volatility caused by concerns about China's slowing economy might force the Fed to hold back on a rate hike until the end of the year.

U.S. investors have endured over two weeks of unusually volatile trade that left the S&P 500 with its biggest monthly drop in three years in August.

Westward Woe: Pacific States Face Big Export Hit in China Slowdown

Global markets got some respite on Thursday from the recent turbulence as Chinese markets remain shut on Thursday and Friday due to public holidays.