Wall Street up after 5-day slide, Washington eyed

Investors remain cautious about potential economic impact of stalemate in budget, debt negotiations

US stocks rose slightly on Thursday after five straight declines, buoyed by job market data, but investors remained cautious about the potential economic impact of an ongoing stalemate in budget and debt negotiations in Washington.

The US Congress, struggling to avert a government shutdown next week, was warned by the Obama administration on Wednesday that the Treasury was quickly running out of funds to pay government bills and could soon face a damaging debt default.

Federal agency shutdowns that could begin with the new fiscal year next Tuesday, unless Congress comes up with emergency funds, were another possible crisis lawmakers would need to avert, adding to investor angst.

House of Representatives Speaker John Boehner urged his unruly caucus to show flexibility over a measure to keep the government open. Republican Representative Pete Sessions said there would be no shutdown or government default.

"It's all hung up on Washington, it's hung on the budget which is four days to go until they decide if the government is going to shut down or not," said Ken Polcari, Director of the NYSE floor division at O'Neil Securities in New York.

"Then you are looking square at the debt ceiling and you already see the fight over whether or not they are going to defund Obamacare or not."

The House debt-limit increase bill will likely include a delay in the implementation of the Obama healthcare law, which could hold up its passage in the Senate.

In a promising sign for the labor market, the number of Americans filing new claims for jobless benefits fell last week to a near six-year low.

The central bank should do everything it can to bring unemployment down as quickly as possible, even at the cost of a little inflation, Minneapolis Fed President Narayana Kocherlakota said Thursday.

Traders were still unsure about the immediate future of the US central bank's stimulus that has boosted the S&P 500 nearly 19% for the year.

Other data showed the US government left its estimate for economic growth in the second quarter unchanged at 2.5%.

The Dow Jones industrial average rose 33.85 points or 0.22%, to 15,307.11, the S&P 500 gained 2.63 points or 0.16%, to 1,695.4 and the Nasdaq Composite added 19.437 points or 0.52%, to 3,780.535.

The S&P is up for the first time in its last six sessions after suffering its worst losing streak since the end of 2012.

Bed Bath and Beyond rose 4.2% to $77.34, a day after it reported a jump in second-quarter profit as the US housing market recovery spurred demand. The S&P retail index gained 0.9%.

Hertz Global shares tumbled 14.25% to $22.12 after the car rental company cut its full-year forecast.

Eli Lilly lost 4.2% to $50.40 as the biggest drag on the S&P 500 after its experimental cancer drug failed to improve survival among breast cancer patients without their cancer worsening in a late-stage trial.

Nike Inc will report results after the closing bell. It will be the first earnings report for the retailer as a member of the blue-chip Dow Jones industrial average. Shares were up 1.4% to $69.86.