Stocks clung to modest gains Friday in volatile trading after economic data offered signs that the recession-strapped U.S. manufacturing sector might be improving.

The handful of investors present on Wall Street also did some bargain-hunting, one day after the Dow Jones industrials closed below 10,000 for the first time in more than four months.

The Dow gained 30.17 points, or 0.30 percent, at 9,949.75 as the blue-chip index was one of the casualties of August's grinding sell-off. The Nasdaq composite index added 13.75 points, or 0.77 percent, at 1,805.43 while the Standard & Poor's 500 index gained 4.55 points, or 0.40 percent, at 1,133.58.

For the week, the Dow fell 4.5 percent, Nasdaq tumbled 5.8 percent, and the S&P 500 slid 4.3 percent. Year-to-date, the Dow is off 7.8 percent, Nasdaq down 26.9 percent and S&P 500 has dropped 14.1 percent.

``The market just had a terrible month, and it's looking for anything positive,'' said Barry Berman, head of Nasdaq trading at Robert W. Baird & Co. ``We've had a lot of rallies and sell-offs and reversals of direction, but the trend has been down, and you just have to wait until the trend reverses.''

Trading activity was very light, with many investors already out on vacation. Advancing issues led decliners by about 3 to 2 on the New York Stock Exchange, where volume was 903.57 million shares, compared to 1.14 billion a day earlier.

In economic news, the Chicagoland Business Barometer rose in August to a seasonally adjusted 43.5 from 38.0 in July, the National Association of Purchasing Management-Chicago said.

Separately, the government reported new orders for goods ticked up 0.1 percent in July, well above expectations for a drop of 0.5 percent.

Both reports sparked hope that manufacturing has stopped deteriorating.

At the same time, the University of Michigan's closely watched consumer sentiment index showed a modest dip to 91.5 in August from 92.4 in the prior month, according to market sources, as the outlook for corporate layoffs worsened and the stock market weakened.

In other economic news, Federal Reserve Chairman Alan Greenspan said capital gains from stocks and homes will have a powerful influence on the economy but that current measures of the impact are inadequate.

Chip equipment maker Novellus late Thursday warned that lower-than-expected demand for some products would hit its bookings and shipments. Its shares fell $2.08 to $44.65.

Chartered Semiconductor Manufacturing Ltd., the world's third-largest contract manufacturer of microchips, maintained its third-quarter loss per share guidance but widened its revenue target band as woes persist in the computer chip industry. Its stock ticked up 78 cents to $26.75.

Consumer products giant Procter & Gamble Co. was in the spotlight after it and rival Unilever NV disclosed they were in talks over P&G's use of covert operations to find out the other's hair care secrets. P&G slipped 57 cents to $74.02.

Dell, the world's No. 1 personal computer maker, added to jitters by turning cautious on PC demand in Asia in the months ahead, blaming continued technology spending cutbacks as economies slow to a crawl. Dell fell 50 cents to $20.63.

Sun Microsystems, which slapped the market on Thursday when it warned weak European and Japanese sales would crimp its results, was the Nasdaq's most active, up 5 cents at $11.12.

The Russell 2000 index rose 0.50 to 468.56.

Stocks overseas were mixed. Japan's Nikkei stock average lost 2.06 percent. Germany's DAX index was up .20 percent, Britain's FT-SE 100 rose .50, and France's CAC-40 dropped .35 percent.

Reuters and the Associated Press contributed to this report.