Stocks Edge Upward After Rocky Start

Updated from 9:44 a.m. EDT

Stocks on Wall Street were working their way up from early losses Thursday as an encouraging manufacturing report helped investors look past a raft of otherwise disappointing economic data.

The Dow Jones Industrial Average rose 18 points to 12,917, and the S&P 500 was up 3 points to 1412. The Nasdaq Composite rose 9 points to 2505.

Investors were bearish at the open, but perked up after northeastern factory activity data showed vast improvement. The Philadelphia Fed Index came in at negative 15.6 for May -- still a sizable contraction, but far less egregious than last month's decline of 24.9, and better than the economists' consensus for negative 19.

"Overall the survey is soft," said Ian Shepherdson, chief U.S. economist with High Frequency Economics, "but its weakness has not been fully reflected in the one industrial survey that really matters, the [Institute for Supply Management] report. And we know from this morning's IP data from the Fed that manufacturing is now struggling, though it is certainly not in meltdown."

Meanwhile, New York manufacturing data registered at negative 3.2 for May, down from a slight uptick in April and worse than break-even expectations.

Another early drag came from the Federal Reserve, which said industrial production fell 0.7% in April, worse than the 0.3% decline that had been expected. March was revised to show an increase of only 0.2%, rather than the 0.3% uptick that had been reported.

Still, said Tony Crescenzi, chief bond strategist at Miller Tabak and contributor to RealMoney.com, a sister site to TheStreet.com, those production numbers are "not a major surprise."