By Avantika Chilkoti and Jessica Menton 

U.S. stocks flipped between small gains and losses Thursday as investors weighed signs of improving trade relations between the U.S. and China, along with concerns about a creeping economic slowdown.

The Dow Jones Industrial Average was up 70 points, or 0.3%, to 24590 in afternoon trading. The S&P 500 fell less than 0.1%, after ending higher two of the past three trading days. The technology-heavy Nasdaq Composite lost 0.4%. All three major indexes are on course to end the week higher.

Broad losses in consumer-discretionary, communication-services and materials shares weighed on the S&P 500. Meanwhile, defensive-oriented stocks, such as real estate and utilities, added about 1%. Trade-sensitive shares also rose, with Dow component Caterpillar climbing nearly 1%.

Thursday's mixed trading session came after U.S. stocks rebounded Wednesday as The Wall Street Journal reported that China was set to introduce an industrial policy that is friendlier to foreign businesses. President Trump said on Twitter earlier in the week that "productive" trade talks were under way.

Still, investors remain skittish about how long the U.S. economy can continue to grow. Some analysts said the absence of major headlines this week has helped drive stock gains, but have also created more noise and uncertainty in markets.

"We've had a few surprising rallies this week, but it certainly doesn't feel that way," said Willie Delwiche, an investment strategist at Baird, referring to big intraday swings on Monday and Tuesday that rattled investors.

Mr. Delwiche cautioned that investors are likely too optimistic that the Federal Reserve will strike a more dovish tone following its meeting next week.

Economists surveyed by The Wall Street Journal expect the Fed to raise its benchmark federal-funds rate to a range of 2.25% to 2.5%. But they dialed back their median forecast for a rise in borrowing costs in 2019, calling for two rate increases next year rather than the three they expected when surveyed last month.

"I don't think the Fed will want to be seen as a hostage to the stock market," Mr. Delwiche said. "Officials might be willing to stick to their guns in terms of their expected rate hikes a little bit more than the market anticipates right now, and that would bring more volatility."

In Thursday's action, shares of General Electric jumped nearly 8% after JPMorgan Chase upgraded the stock to neutral from underweight. Separately, the struggling conglomerate reached a deal to sell off part of its GE Digital business and set aside the rest in a separate company focused on industrial Internet of Things software. Shares of the company have lost more than half of their value in 2018.

On the earnings front, Ciena topped Wall Street earnings and revenue estimates, sending shares of the networking-equipment maker more than 8.5% higher. Tailored Brands, the parent of apparel chain Jos. A. Bank, plunged 30% after the company late Wednesday lowered its guidance due to weak sales at Men's Wearhouse.

Meanwhile, the European Central Bank confirmed it would phase out its bond-buying program amid rising concerns about global growth.

"I think markets are nervously trying to rebuild some kind of confidence here, though they remain quite edgy," said Paul O'Connor, head of the U.K. multiasset team at Janus Henderson, pointing to dovish comments from the U.S. Federal Reserve and easing trade tensions. "The immediate concern is probably focused on the ECB, but I think a more positive broader theme has emerged."

The Stoxx Europe 600 fell 0.2% after British Prime Minister Theresa May on Wednesday survived a vote of no confidence triggered by rebel members of her Conservative Party.

Though the vote erases the threat of another leadership challenge for a year, analysts say it has weakened Mrs. May's authority and delayed negotiations over the Brexit deal.

In Asia, Japan's Nikkei Stock Average rose 1%, while Hong Kong's Hang Seng Index gained 1.3%.

Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com and Jessica Menton at Jessica.Menton@wsj.com

(END) Dow Jones Newswires

December 13, 2018 13:10 ET (18:10 GMT)

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