Dow Posts Modest Gain, but Nasdaq Slips

Updated from 1:14 p.m. EDT

Blue chips closed moderately higher in an abbreviated session Thursday, but tech shares stumbled as a steep drop in Nvidia (NVDA Quote) dragged down the chip sector.

The Dow Jones Industrial Average rose 73.03 points, or 0.7%, to 11,288, and the S&P 500 was higher by 1.38 points, or 0.1%, at 1262.90. The Nasdaq gave back 6.08 points, or 0.3%, to 2245.38.

Stocks initially took a hit after the Institute for Supply Management's June services index came in at 48.2, down from 51.7 for May and falling short of economists' prediction of 51. The number indicates a contraction in purchasing and supply activity in the service sector. Traders sold off stocks on the news, but the indices rebounded from their lows just as quickly.

Investors largely shrugged off a sixth consecutive monthly decline in nonfarm payrolls. The Labor Department reported that the U.S. shed 62,000 workers last month, a figure that was roughly in line with the consensus target for a drop of 55,000. The unemployment rate stayed at 5.5%, whereas a downtick to 5.4% had been expected.

At the same time, the data for the prior two months were revised lower by a combined 52,000 workers. A separate report showed an increase in weekly initial jobless claims to 404,000.

Despite the uninspiring jobs news, investors opted to bid equities higher at the start of the session. Trading ended at 1 p.m. EDT, and U.S. exchanges will be closed Friday in observance of Independence Day.

Some market observers have blamed low trading volume for the market's severe reactions to recent data releases. Volume has been generally lower lately, says Doreen Mogavero, president and CEO of Mogavero Lee, but Wednesday's selloff occurred on volume of about 1.5 billion shares on the New York Stock Exchange, a number she considers "average."