* Jobless claims, inflation data support stocks
* Hologic up on Icahn stake, pares gain on shareholdersrights 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 Thursdayafter data pointed to a slowly improving labor market andsubdued inflation, keeping intact most investors' expectationsthat the Federal Reserve is unlikely to scale back stimulusuntil early next year.
The number of Americans filing new claims for unemploymentbenefits fell more than expected last week while producer pricesfell for a second straight month in October, indicatinginflation pressures remain muted.
Separate data showed U.S. manufacturing rebounded afterhitting a one-year low in October and output grew at its fastestpace in nine months.
However, the Philadelphia Federal Reserve Bank said factoryactivity in the U.S. mid-Atlantic region slowed in November,dropping to its lowest since May, although a manufacturingmeasure remained positive for a sixth consecutive month.
An indication that the Fed may be ready to start scalingback its $85 billion a month stimulus has weighed on equities,with the S&P 500 falling in the prior three sessions. But thecentral bank has repeated it will not taper until the economycan stand on its own and interest rates will remain low wellafter stimulus is cut back.
"A big driver are fund flows out of fixed income and intoequities. The Fed is encouraging this by keeping rates low.Valuations are about the historic average and that is certainlypositive, given the low level of interest rates," said TimGhriskey, chief investment officer of Solaris Group in BedfordHills, New York.
"It sort of becomes a one-choice investment decision."
The Dow Jones industrial average rose 91.51 points or0.58 percent, to 15,992.33, the S&P 500 gained 11.04points 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 severaltimes but failed to close above 16,000. That level as well as1,800 on the S&P have provided resistance so far, but a clearclimb above them could further entice money managers eager tochase performance.
Target shares fell 3.5 percent to $64.13 aftercomparable sales rose a smaller than expected 0.9 percent in thethird 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-quarterresults above analysts' average estimates and said it waswell-positioned for the upcoming holiday season.
Activist investor Carl Icahn reported having a 12.6 percentstake in medical device maker Hologic Inc, promptingthe company to adopt a shareholder rights plan to protect itselffrom hostile takeovers. Hologic shares rose 3.1 percent to$22.97.
Sears Holdings, which operates Sears and Kmartstores, reported a wider quarterly net loss as sales fell atboth chains. The company invested in more promotions targetingrewards members. Shares fell 1.7 percent to $60.66.
Abercrombie & Fitch reported a quarterly loss, withcomparable-store sales declining for a seventh straight quarteras the apparel retailer struggled with the changing tastes ofyoung shoppers. But its shares edged up 0.1 percent to $35.03.
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