The stock market dropped in early trading after a payroll company reported that U.S. businesses added the most jobs in a year last month as manufacturing and construction expanded. Investors worried that this latest sign of economic expansion could mean that the Fed will pull back on its stimulus sooner than previously expected.
Indexes reversed course and turned higher in mid-morning trading after another survey showed weakness in the U.S. service sector last month. The Institute for Supply Management said its service-sector index fell to the weakest reading since June, indicating that cautious spending by consumers and businesses may be slowing growth.
The latest bout of investor anxiety about the Fed's plans for its stimulus program comes ahead of the government's closely watched monthly employment report on Friday. The Fed's $85 billion in monthly bond purchases has been supporting financial markets and encouraging investors to buy stocks by making bonds seem relatively expensive. The Fed's program is aimed at supporting the economy by keeping long-term interest rates very low to encourage borrowing and hiring.
The market has had an outstanding year. The Dow Jones industrial average and the Standard & Poor's 500 index have climbed to record levels. The only two months when the stock market declined both occurred when investors thought the Fed was poised to ease back on its stimulus.
The Dow Jones industrial average rose 37 points, or 0.2 percent, to 15,950 as of 11:10 a.m. Eastern. The S&P 500 index gained three points, or 0.2 percent, to 1,798. The Nasdaq composite rose 10 points, or 0.3 percent, to 4,047.
Traders and investors are divided as to whether the beginning of the end of the Fed's stimulus will be good or a bad for the stock market.
Stock investors should welcome the end of stimulus because it shows the economy is strengthening, said Doug Cote, chief market strategist at ING Investment Management.
"Ultimately, it's a good thing," said Cote. "It means the economy is standing on its own two feet."
Stocks have had a sluggish start to December, statistically one of the strongest months for the market. The S&P 500 has dropped 0.4 percent so far, paring its annual gain to 26 percent. If it closes at that level, the index will log its best year in a decade.
In government bond trading, the yield on the 10-year note climbed to 2.84 percent from 2.78 percent.
In commodities trading oil rose 87 cents, or 0.9 percent, to $96.92. Gold climbed $7.20, or 0.6 percent, to $1,227.90 an ounce.
Among stocks making big moves:
— Sears fell $4.58, or 8.3 percent, to $50.99 after billionaire hedge-fund manager Eddie Lampert reduced his stake in the department store chain to less than half.
— Express fell $5.20, or 21 percent, to $19.48 after the clothing retailer reported earnings that missed analysts' estimates.