By Anora Mahmudova and Barbara Kollmeyer, MarketWatch Energy sector stocks sell off

NEW YORK (MarketWatch) -- U.S stocks ended Thursday's mixed trading activity slightly higher, but a continued sell-off in energy stocks, due to falling oil prices, weighed on the S&P 500.

The Dow Jones Industrial Average (DJI) gyrated between gains and losses, but ended the session at a fresh record high -- recording its 25th record closing high this year. The blue-chip index gained 40.59 points, or 0.2%, to 17,654.79, with nearly all of the gains coming from Wal-Mart Stores Inc. and Boeing Company.

The S&P 500 (SPX) eked out a 1-point gain to close at 2,039.33, as energy sector stocks weighed on the index.

The Nasdaq Composite (RIXF) finished the day 5 points, or 0.1%, higher at 4,680.14.

Beyond oil concerns, some industry watchers have been fretting about the markets rapid runup in stocks occurring so soon after turbulence in October, which sent U.S. stocks tumbling.

Record levels on the S&P 500, however, are sparking a debate among strategists, who have consistently expressed concerned about the index's rapid recovery from the pullback last month. In just 12 sessions, the index, which fell nearly 10% on an intraday basis, has bounced back from the bottom it hit on October 15. Low volatility and bullish investor sentiment are among five red flags that the stock market's record run is raising for some.

Nour Al-Hammoury, chief market strategist at ADS Securities, said the U.S. market is "heavily overbought" and he expects another short-term pullback in the next few days, especially without big economic data. Support levels to watch over the near term on the S&P 500, include 2,024, then 2,019, with a break of both leading to the key psychological barrier of 2,000, he said.

For the Dow industrials, Al-Hammoury is watching for technical support levels at 17,408 and then 17,350. "We still believe that the current high could well be the last 'false' rally before the major correction, similar to what happened after the end of QE1 and QE2. Therefore, selling rallies remains our short term preferred strategy," he said in a note. Read: Don't get suckered by stock market's winning streak

Meanwhile, Michael Arone, chief investment strategist at SSGA's US Intermediary Business Group, said that the underlying trends, such as solid earnings and improving economy, have been driving the market higher in the past few weeks.

"In this environment, PE ratios are likely to expand and drive markets higher in the short-term. Falling oil prices along with stronger dollar, low mortgage rates and solid job gains will result in increased consumer spending. We will be watching Friday's retail sales very closely to see if that is the case," Arone said.

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Economic data: The number of people who applied for unemployment benefits last week posted the biggest increase in two months, but initial claims are still exceedingly low amid an uptick in hiring and relatively few layoffs.

Labor market data watched closely by the Federal Reserve - JOLTS showed an increase in quit rates and hiring. Job openings fell in September, but only because hiring hit its highest level in over six years. Next on the data calendar is the October Federal budget at 2 p.m. Eastern.

Earnings: Wal-Mart Stores Inc. shares rose (WMT) 4.7% after third-quarter earnings and sales beat forecasts.

Kohl's Corp. fell (KSS) 3.2% after sales and earnings missed forecasts for the third quarter. Nordstrom Inc. (JWN) will also report. Read Movers & Shakers

Shares of J.C. Penney slid (JCP) 8.5% after third-quarter sales missed already reduced expectations, though its loss was smaller than expected.

Shares of Baker Hughes Inc. (BHI) soared 15% Thursday after The Wall Street Journal reported that the company was in talks to be acquired by peer oil-field services company Halliburton Co. (HAL) . Halliburton's stock gained 1.1%.

Warren Buffett agreed to acquire the Duracell battery business from Procter & Gamble Co. (PG) in a deal valued at $4.7 billion. Shares of Procter & Gamble closed 1% lower.

Cisco Systems Inc. (CSCO) rose 2.3% after the network-technology company posted quarterly results that topped forecasts.

Viacom Inc. (VIA) rose 2.9% after reporting fiscal fourth-quarter net profit of $732 million, or $1.72 a share, compared with earnings of $804 million, or $1.68 a share, in the year-earlier period.

Deal talk drove a 14% gain for shares of DreamWorks (DWA) after The Wall Street Journal said toy maker Hasbro Inc. (HAS) is in early talks to buy the animation studio, citing people familiar with the matter. Hasbro shares fell 4.3%.

No letup for oil prices: Crude(CLZ4) continued to fall, down nearly 3%, in the wake of comments by Saudi Arabia's oil minister on Wednesday. Gold(GCZ4) made marginal gains, but was kept in check by the dollar(USDJPY), which stayed well above Yen115. The yen also fell as Japanese stocks extended a three-day winning streak, with the Nikkei 225 hitting a seven-year high.

European stocks closed slightly higher. Read: European stocks could be gearing up for a big rally.

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