MARKET SNAPSHOT: Stocks Waver After Philly Fed Disappoints

By Victor Reklaitis, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks alternated between small gains and losses on Thursday, as traders weighed downbeat reports from the Philly Fed, China and Europe against an encouraging reading on U.S. manufacturing and other new data.

The S&P 500 index (SPX) was last up 3 points, or 0.2%, to 1,832, while the Dow Jones Industrial Average (DJI) gained 35 points, or 0.2%, to 16,076. The Nasdaq Composite (RIXF) tacked on 6 points, also 0.2%, to 4,244.

The main indexes edged up at the open, then turned slightly negative before creeping back into positive territory.

The Philadelphia Federal Reserve's manufacturing index dropped sharply to a reading of negative 6.3 in February from a 9.4 reading in January, well below a MarketWatch-compiled economist forecast of 7.3.

On the upside, Markit's U.S. flash purchasing managers index jumped to its highest level in almost four years, rising to 56.7 in February.

In other U.S. economic news, the number of people who applied for unemployment benefits last week edged down by 3,000 to 336,000, indicating little change in the U.S. labor market and about in line with expectations. In addition, U.S. consumer prices rose a seasonally adjusted 0.1% in January, matching forecasts.

In China, a key gauge showed a larger-than-expected contraction for manufacturing in the world's No. 2 economy. The HSBC/Markit preliminary version of its monthly manufacturing PMI index fell to 48.3, which missed a forecast of analysts polled by Bloomberg News for the index to stay at January's 49.5.

In Europe, Markit data showed business activity in the euro zone lost momentum in February, owing to weakness in France, the region's second largest economy. The monthly gauge of activity across the manufacturing and services sectors of the 18-nation euro zone fell to 52.7 in February from 52.9 the previous month.

On Wednesday, stocks closed lower after Fed minutes showed no real consensus about when short-term rates would begin to rise.

Stocks also had their best week so far this year last week, and technical analysts say the S&P 500 could be hitting some resistance as it nears its Jan. 15 record close.

"The S&P couldn't get the power to break above all-time highs yesterday and reversed pretty hard," said Scott Redler, chief strategist at T3 Live and T3 Trading Group, in a note on Thursday. That type of action suggests traders should "reduce some risk," he added.

Among individual stocks, Facebook Inc. (FB) fell 1.5% a day after the company stunned Wall Street with a deal to buy Internet-based mobile texting app WhatsApp. There was some speculation that maybe the company paid too much.

Wal-Mart (WMT) shares lost 2% after the Dow component delivered a weaker-than-expected forecast for its recently started fiscal year and current quarter.

Tesla Motors Inc. (TSLA) shares rose 9% after the electric-car company swung to an adjusted profit in the fourth quarter.

Safeway Inc. (SWY) was up 4% after it said it's holding talks on the possible sale of the company, though no deal has yet been reached.

Shares of PepsiCo Inc.(PEP) were up 1.7% after The Wall Street Journal reported that Nelson Peltz's Trian Fund Management LP is renewing an effort to break up the company.

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