Updated at 12:27 p.m. ET

Stocks turned higher Thursday after mixed reports on both the housing and labor markets pointed to lackluster growth, but as comments from German Chancellor Angela Merkel appeared to back potential moves by the ECB to fight the eurozone crisis. Cisco (CSCO) soared on a dividend hike, leading the Dow stocks. Wal-Mart (WMT) fell on a disappointing third-quarter outlook, and Facebook (FB) reached record lows.

The Dow Jones Industrial Average ($INDU) was up 71 points at 13,236. The S&P 500 ($INX) was up 8 points at 1,413. The Nasdaq Composite ($COMPX) was up 24 points at 3,055.

World shares were little changed after hints that China, which is relied upon to be the global growth engine, may further loosen its monetary policy. At the same time, China warned that its trade outlook for the year is worsening, mostly because of the troubles in Europe.

US economic data
The department of Labor issued a somewhat mixed report. Revising the previous week's figure up to 364,000 from 361,000, it also said the number of Americans filing new claims for jobless benefits rose by 2,000 to a seasonally adjusted 366,000, in line with economists' forecasts.

But the four-week moving average for new claims, a better measure of labor market trends, dropped 5,500 to 363,750. That was the lowest since March and the second lowest since April 2008.

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Similarly, housing data was mixed. Housing starts unexpectedly fell 1.1% in July to a seasonally adjusted annual rate of 746,000 units, well below economists' forecasts. Also, gains from the prior month were revised lower.

Meanwhile, building permits rose 6.8% in July to a 812,000-unit pace, the highest rate since August 2008. After six years of a housing market slump, recent signs pointed to the beginning of recovery that could help boost the economy.

The Philadelphia Fed's manufacturing index only increased to negative 7.1 in August from negative 12.9 in July, worse than the negative 5.0 economists were expecting, according to Briefing.com. This marks the fourth consecutive negative reading.  

The dollar strengthened against most major currencies after a strong U.S. industry output report on Wednesday. Oil remained near three-month highs. 

Stocks to watch

Cisco Systems (CSCO) shares jumped after the world's largest network equipment maker announced a 75% dividend hike as it managed to also post quarterly results that beat estimates. But the company said Europe would stay challenging in the next few quarters.

Wal-Mart Stores (WMT) shares fell despite the company's topping analyst quarterly profit estimates. The world's largest retailer, however, missed Wall Street's sales estimates and forecast full-year earnings that could fall short of analyst expectations. Wal-Mart's gains in the U.S. are slowing.

Facebook shares were slipping as the social network frees up 271.1 million of its shares, boosting by 60% the number that could be traded. Considering the concerns that have weighed on the stock since the company's poor IPO, the extra shares will likely not help increase their valuation.

Sears Holdings (SHLD) shares rose after the department store operator reported a narrower fiscal-second-quarte​r loss that matched expectations as the retailer's lowered costs. But sales declined more than expected as domestic same-store sales dropped 3.7% and the company had fewer full-line stores in operation.

Electronic Arts (EA) shares soared after The New York Post reported it is exploring a sale, including to private-equity giants KKR and Providence Equity Partners, as the video game maker struggles to grow its business amid competition from free online gaming sites.

Agilent Technologies (A) shares tumbled after the maker of scientific-testing equipment cut its full- year forecasts, citing slowing economic growth and delays in order deliveries from customers.