* Jobless claims, inflation data support stocks
* Hologic up on Icahn stake, pares gain on shareholders rights plan
* Target cuts full-year profit forecast
* Indexes up: Dow 0.58 pct, S&P 0.62 pct, Nasdaq 0.90 pct
By Chuck Mikolajczak
NEW YORK, Nov 21 (Reuters) - U.S. stocks rose on Thursday after data pointed to a slowly improving labor market and subdued inflation, keeping intact most investors' expectations that the Federal Reserve is unlikely to scale back stimulus until early next year.
The number of Americans filing new claims for unemployment benefits fell more than expected last week while producer prices fell for a second straight month in October, indicating inflation pressures remain muted.
Separate data showed U.S. manufacturing rebounded after hitting a one-year low in October and output grew at its fastest pace in nine months.
However, the Philadelphia Federal Reserve Bank said factory activity in the U.S. mid-Atlantic region slowed in November, dropping to its lowest since May, although a manufacturing measure remained positive for a sixth consecutive month.
An indication that the Fed may be ready to start scaling back its $85 billion a month stimulus has weighed on equities, with the S&P 500 falling in the prior three sessions. But the central bank has repeated it will not taper until the economy can stand on its own and interest rates will remain low well after stimulus is cut back.
"A big driver are fund flows out of fixed income and into equities. The Fed is encouraging this by keeping rates low. Valuations are about the historic average and that is certainly positive, given the low level of interest rates," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
"It sort of becomes a one-choice investment decision."
The Dow Jones industrial average rose 91.51 points or 0.58 percent, to 15,992.33, the S&P 500 gained 11.04 points or 0.62 percent, to 1,792.41 and the Nasdaq Composite added 35.246 points or 0.9 percent, to 3,956.516.
The benchmark S&P index had fallen 0.9 percent over the past three sessions, and the Dow industrials touched 16,000 several times but failed to close above 16,000. That level as well as 1,800 on the S&P have provided resistance so far, but a clear climb above them could further entice money managers eager to chase performance.
Target shares fell 3.5 percent to $64.13 after comparable sales rose a smaller than expected 0.9 percent in the third quarter and it lowered its full year profit forecast.
But the Morgan Stanley retail index rose 0.3 percent, boosted by a 6.7 percent climb in Williams-Sonoma Inc to $59.21 after the home products retailer reported third-quarter results above analysts' average estimates and said it was well-positioned for the upcoming holiday season.
Activist investor Carl Icahn reported having a 12.6 percent stake in medical device maker Hologic Inc, prompting the company to adopt a shareholder rights plan to protect itself from hostile takeovers. Hologic shares rose 3.1 percent to $22.97.
Sears Holdings, which operates Sears and Kmart stores, reported a wider quarterly net loss as sales fell at both chains. The company invested in more promotions targeting rewards members. Shares fell 1.7 percent to $60.66.
Abercrombie & Fitch reported a quarterly loss, with comparable-store sales declining for a seventh straight quarter as the apparel retailer struggled with the changing tastes of young shoppers. But its shares edged up 0.1 percent to $35.03.