By Kate Gibson, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks on Thursday climbed for a second day, denting weekly losses, as better-than-expected economic reports trumped the belief that the data increase odds that the Federal Reserve will scale back bond purchases next month.

The Dow Jones Industrial Average (DJI) ended at 14,840.95, up 16.44 points, or 0.1%. It had initially dropped 32 points and had risen nearly 92 points.

The S&P 500 index (SPX) added 3.21 points, or 0.2%, to 1,638.17, with telecommunications and consumer discretionary the best performing and energy and utilities the sole laggards among its 10 major industry groups.

The U.S. economy climbed at a more rapid pace in the second quarter than previously believed, with gross domestic product up 2.5% at an annual rate in the April to June period instead of the initial read of 1.7%, according to data released by the U.S. Department of Commerce.

"The stock people are torn between two things. The GDP going up would normally push stocks higher, but this is the last GDP report that prints before the Fed meets again," said Chuck Butler, president, EverBank World Markets.

The price of crude retreated from the highest level in more than two years amid reports that a military strike against Syria might not be imminent. On the New York Mercantile Exchange, oil futures for October delivery (CLV3) falling $1.30, or 1.2%, at $108.80 a barrel.

"The markets have put it (Syria) on the back burner today. One of the reasons why is the prime minister of the U.K. said an immediate strike against Syria is not imminent," said Butler, who believes crude will "eventually settle back down to the high" $90 a barrel level.

Energy stocks had led the broad market higher Wednesday as the price of oil hit a two-year high above $110 on concerns over Syria.

See 9 charts of stock market reactions to past U.S. airstrikes.

Thursday's economic reports included the government's count of those applying for jobless benefits, with the number falling by 6,000 to 331,000 last week, with the four-week moving average up 750 at 331,250, a level that has it near its lowest since late 2007.

Shares of Verizon Communications Inc. (VZ) paced blue-chip gains, up 2.7%, after Vodafone Group PLC (VOD) said the companies were in negotiations over their Verizon Wireless venture. Vodafone's U.S. shares surged 8.1%.

Off the Dow, Guess Inc. (GES) shares leapt nearly 13% after the apparel retailer reported second-quarter profit that beat expectations.

The Nasdaq Composite (RIXF) gained 26.95 points, or 0.8%, to 3,620.30.

For every five stocks falling, roughly eight rose on the New York Stock Exchange, where 546 million shares traded. Composite volume approached 2.5 billion.

Richmond Fed President Jeffrey Lacker, a critic of the Fed's third round of asset purchases, said Thursday afternoon that a "good case can be made" for reducing the Fed's bond-purchase program, given improvements in the labor market.

The dollar (DXY) gained against the currencies of major U.S.trading partners, including the yen (USDJPY) and the euro (EURUSD). Gold futures (GCZ3) fell $5.90, or 0.4%, to end at $1,412.90 an ounce.

Longer-term Treasury prices rose, with the yield on the 10-year note (10_YEAR) used in figuring mortgage rates and other consumer loans down 1 basis point at 2.761%.

"The 10-year notes made a good recovery from early losses in the face of the stronger-than-expected GDP revision. I'm thinking the bond market is finally ready for the long awaited tapering," Elliot Spar, market strategist at Stifel, Nicolaus & Co., noted in afternoon commentary.

"However, the action in the interest-sensitive sectors such as utilities, REITs [real estate investment trusts] and housing are mixed," Spar added.

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