The U.S. stocks pared most of their early losses and ended mixed on Thursday after French and German leaders said that there will be a "definitive agreement" to address the region's debt problems before Wednesday.
The Dow Jones industrial average closed at 11,541.78, gaining 37.16 points, or 0.32 percent. The Standard & Poor's 500 ended up 5.51 points, or 0.46 percent, to 1,215.39. The Nasdaq Composite Index dropped 5.42 points, or 0.21 percent, to 2,598.62.
Major indexes were under pressure in morning session as there was rumor that the European summit aiming at addressing the crisis might be postponed owing to disagreements on how to deploy cash in the bailout fund.
However, losses were quickly pared in the afternoon after the leaders of France and Germany said that a key bailout plan would be approved by next Wednesday at the latest.
The market has become overly sensitive to chatters and rumors out of Europe and to the headline news recently. Anything related to a possible solution to the European debt problems can move the market.
Stocks got a blow on Monday as German Finance Minister said that governments will not yield a definitive solution to the region's debt crisis. On Wednesday, remarks from French President Nicholas Sarkozy indicating that talks to tackle the euro zone crisis were stuck sparked another sell-off, one day after a late session rally triggered by a report saying that Germany and France had reached an agreement to increase the firepower of Europe's recently overhauled bailout fund.
Thursday's economic data was overall positive, but failed to draw much attention as all eyes were on Europe.
According to the Labor Department, the number of people applying for jobless benefits dropped 6,000 to a seasonally adjusted 403,000 last week, in line with previous estimates.
Manufacturing in the Philadelphia region showed signs of recovery in October, the Federal Reserve Bank of Philadelphia reported on Thursday in its latest monthly survey.
The Philly Fed index leaped to 8.7 from -17.5, well above the - 9.4 consensus, the first positive reading in three month. This is a very welcome surprise to investors, easing some concerns of a double dip recession in the world's biggest economy.
In other markets, the U.S. dollar fell against most major currencies in late New York trading, and U.S. crude oil also ended lower.
Light, sweet crude for November delivery fell 81 cents, or 0.94 percent to settle at 85.30 dollars a barrel on the New York Mercantile Exchange. But in London, Brent crude for Dec. delivery rose 1.38 dollars, or 1.27 percent to close at 109.77 dollars a barrel.