Market volatility eases, stocks rise slightly

U.S. stocks were slightly higher in late afternoon trading Thursday as global markets stabilized after two days of volatile trading sparked by China's moves to devalue its currency.

Investors remained cautious though as a report showing a July rebound in retail sales reignited talk of a Federal Reserve rate hike.

The Dow Jones industrial average was up 0.2% to 17,4399. The slight rise comes after a volatile session on Wednesday saw the the blue-chip index recover from a 277-point drop to close nearly flat.

The Standard & Poor's 500 index gained 0.1% and the Nasdaq composite index added 0.1%.

Several reports released Thursday pointed to a strengthening economy:

• Retail  sales rose 0.6% in July as consumer spending on autos and dining out picked up. The government also revised upward its data for May and June retail sales.

The retail data "will leave the September rate hike call at 50/50 where it should be given the amount of data still to be released over the next four weeks," said Mizuho Securities economist Steven Ricchiuto.

• Weekly jobless claims rose slightly but the less-volatile monthly average fell to a 15-year low. Applications for unemployment benefits rose 5,000 to a seasonally adjusted 274,000 last week as the four-week average dropped 1,750 to 266,250, the lowest since April 15, 2000.

Global markets were higher Thursday after a two-day sell-off sparked by China’s currency devaluation. China’s yuan fell again as its central bank set a lower guidance rate for the yuan against the dollar for a third day, but the decline was smaller than in previous trading sessions.

The People’s Bank of China set a rate of 1% against the dollar. The two previous guidance rates were set at 1.6% and 1.9%.

Japan’s Nikkei 225 rose 1% while the Shanghai composite index in mainland China added 1.8%.

European shares rose, led by France’s CAC 40 index which added 1.3%. Germany's DAX index gained 0.8% and Britain's FTSE 100 fell less than 0.1%.