By Caroline Valetkevitch
NEW YORK (Reuters) - The S&P 500 and Dow snapped five-day losing streaks on Thursday on positive job market data but gains were limited as investors worried if Washington lawmakers would pass bills to avoid a government shutdown and possible U.S. debt default on time.
Initial claims for state unemployment benefits dropped last week near a six-year low, the Labor Department said, which could bode well for employers adding workers to their payrolls. Other data on housing and consumer prices were less positive signs of the recovery.
But the encouraging jobless claims data comes shortly before September's unemployment report, which will be important input for the Federal Reserve as it decides when to change monetary policy.
"If today's number was a good number, that means when we see the job report on October 4, that number ought to be pretty strong," said Phil Orlando, chief equity market strategist at Federated Investors in New York.
"That's going to give us another clue as to the underlying strength of the labor market, which was one of the reasons the Federal Reserve chose not to commence the taper."
Consumer discretionary shares gave the biggest boost to the S&P 500, which was up for the first session since the September 18 rally on the Fed's decision to keep its stimulus program unchanged for now. The S&P consumer discretionary index rose 0.9 percent.
The Dow Jones industrial average was up 55.04 points, or 0.36 percent, at 15,328.30. The Standard & Poor's 500 Index was up 5.90 points, or 0.35 percent, at 1,698.67. The Nasdaq Composite Index was up 26.33 points, or 0.70 percent, at 3,787.43.
The Dow and S&P 500 rose after five straight sessions of losses, while the Nasdaq closed just shy of a high last seen about 13 years ago.
In Washington, House Republicans refused to give in to President Barack Obama's demands for straightforward bills to keep the government running beyond September 30 and to increase borrowing authority to avoid a historic default.
Congress, struggling to avert a government shutdown next week, was warned by the Obama administration that the Treasury was quickly running out of funds to pay government bills and could soon face a damaging debt default.
Another threat to the recovering economy was the prospect of federal agencies shutting down beginning on Tuesday with the new fiscal year unless Congress comes up with emergency funds.
Among top percentage gainers on the Nasdaq, Bed Bath and Beyond
After the bell, shares of Nike Inc
During regular trading, shares of J.C. Penney Co Inc
On Wednesday, the stock hit a 13-year low after Goldman Sachs said it expects sales at the troubled department store chain to improve more slowly than expected.
Among Thursday's decliners, Eli Lilly
For the third quarter, year-over-year S&P 500 earnings are expected to have risen 4.8 percent, down sharply from a July 1 forecast for earnings growth of 8.5 percent, according to Thomson Reuters data.
Other economic data on Thursday showed the U.S. government left unchanged its estimate for economic growth in the second quarter at 2.5 percent.
Volume totaled about 5.4 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, below the average daily closing volume of about 6.3 billion this year.
Advancers outpaced decliners on the NYSE by about 1.8 to 1 and on the Nasdaq by about 1.5 to 1.
(Editing by Bernadette Baum, Nick Zieminski and Kenneth Barry)
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