NEW YORK (BLOOMBERG) - U.S. stocks fluctuated on Thursday morning, following the Standard & Poor's 500 Index's best gain in three weeks, as investors remain cautious following equities' worst quarter since 2011.

The S&P 500 rose 0.2 per cent to 1,924.52 at 9:34 a.m. in New York (9:34 pm Singapore time) to trim its third- quarter decline to 6.9 per cent.

"We just put a bad quarter behind us," said Patrick Spencer, equities vice chairman at Robert W. Baird & Co. in London. "All eyes will be on the data-dependent Fed and earnings this quarter. The fundamentals look certainly reasonable. The Chinese economy is probably stabilizing and not deteriorating further. All the bad news is being discounted now."

China's official factory gauge held near a three-year low as government stimulus measures showed signs of steadying the weakness in manufacturing. Concerns about a slowdown in the world's second-biggest economy, along with mixed messages on the Federal Reserve's rate policy, sent the S&P 500 to consecutive monthly declines and boosted market turbulence.

The U.S. equity benchmark rose the most since Sept. 8 yesterday as investors snapped up some of the third quarter's most-battered companies, with energy, raw-material and health- care shares among the leaders. The S&P 500 closed Wednesday down 9.9 per cent from its record set in May, and came within five points Tuesday of its 2015 closing low reached in August.

While the gauge was 2.8 per cent above its worst closing level of this year, almost 35 per cent of the index's members have slipped back below their Aug. 25 price. The heavyweights are doing all the lifting: Apple Inc., Microsoft Corp. and Exxon Mobil Corp., the three largest companies by market cap, account for nearly one-fifth of gains since the market bottomed after a four-day selloff of 10 per cent.

Meanwhile, investors continue to monitor data for indications on the trajectory of interest rates, with Fed officials maintaining that the economy is strong enough to cope with an increase as soon as this year. Data today showed the number of Americans filing applications for unemployment benefits rose last week, maintaining a pattern of gains and losses around decade lows that signals firings remain muted.

Economists forecast a report later will show the pace of manufacturing expansion slowed this month. Traders are pricing in about a 43 per cent chance that Fed will raise borrowing costs this year, and 50 per cent odds on a January increase.