NEW YORK (AP) -- Investors recovered their poise by midday Thursday after an early sell-off sent stocks sharply lower.
U.S. markets fell immediately after the opening bell following a global slump prompted in part by an unexpectedly weak report on manufacturing in China. Concern that the Federal Reserve might ease back on its economic stimulus program sooner than expected had also riled investors.
The dip gave investors who had missed this year's rally in stocks an opportunity to get into the market, and by midday stocks had recouped most of their early losses, even climbing slightly by midday.
"Most institutions, most hedge funds and most individuals have watched the market go up without them, so the dips are being bought," said Jim Russell, regional investment director at U.S. Bank. "There's a very strong case for U.S. stocks."
A pickup in hiring at U.S. employers, a recovery in the housing market and record profits at U.S. corporations have helped push the Dow Jones industrial average up 16.5 percent this year. The Standard & Poor's 500 index is 15.4 percent higher.
On Thursday, the Dow was up 24 points, or 0.1 percent, at 15,331 as of 2:21 p.m. Eastern Daylight Time. It had been down as many as 127 points in the early going following steep losses in European and Japanese markets.
The sell-off in global markets came after minutes from the latest Fed meeting, released Wednesday afternoon, indicated that several policymakers are leaning toward slowing the central bank's bond-buying program as early as June, sooner than many investors anticipated, if the economy continues to recover.
The central bank is spending $85 billion a month buying bonds. That program has been keeping interest rates low in an effort to encourage borrowing, spending and investing. It's also meant to encourage investors to buy risky assets like stocks.
Investors were unsettled by a report Thursday that showed manufacturing in China, the world's No. 2 economy, unexpectedly shrank this month. HSBC Corp. said the preliminary version of its monthly purchasing managers index had dropped to a seven-month low.
China's booming economy has been a major driver of global growth in recent years and investors worry when they see signs that it's slowing down.
Global stock markets fell sharply in Asia Thursday. Japan's Nikkei index dropped 7.3 percent after news was released about the slowdown in Chinese manufacturing. The sell-off extended to Europe, where Germany's DAX index, which has been at a record high, slid 2.1 percent.
Initially, the sell-off spread to the U.S., but it didn't last.
Some investors also judged Thursday that concern about the Fed easing, or tapering, its economic stimulus program was overdone.
Any pullback of the Fed's stimulus should be seen as a positive signal because it would mean that the U.S. economy is getting stronger, said Joe Quinlan, chief market strategist at U.S. Trust.
"When the Fed starts to taper, the fundamentals of the U.S. economy have improved even further than we have already seen," said Quinlan. "The Fed tapering is actually a good story for U.S. equities and the economy."
Encouraging news about the U.S. economy also helped the case for stock market bulls Thursday.
Sales of new homes rose in April to the second-highest level since the summer of 2008, the Commerce department reported Thursday. Also, the median price for a new home hit a record high, another sign that housing is recovering.
There was good news on the labor market, too.
The number of Americans applying for unemployment benefits fell 23,000 last week to 340,000, a level consistent with solid job growth. That suggests employers are laying off fewer workers. The decline in claims has coincided with steady job growth over the past six months.
In other U.S. stock trading, the Standard & Poor's 500 index was down three points to 1,652, or 0.25 percent. The Nasdaq composite fell three points, or 0.1 percent, to 3,459.
In commodities trading, the price of crude oil was flat at $94.28 a barrel. Gold rose $24.40, or 1.8 percent, to $1,391.80 an ounce. The dollar fell against the euro and the yen.
In U.S. government bond trading, the yield on the benchmark 10-year Treasury note edged down to 2.03 percent from 2.04 percent.
Among stocks making big moves, Ralph Lauren fell $4.36, or 2.3 percent, to $183.70. The apparel seller reported revenue that fell short of what financial analysts were expecting. Sluggish economic conditions and the decision to cut certain businesses reduced sales.
PC maker Hewlett-Packard surged $3.10, or 14.6 percent, to $24.32, after the company delivered second-quarter earnings that topped the estimates of both its own management and financial analysts.
Dollar Tree, a discount retailer, rose $2.12, or 4.36 percent, to $50.54 after it said that its earnings climbed 15 percent as customers spent more at its stores. The earnings beat the expectations of Wall Street analysts' that follow the company.
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