U.S. stocks closed mixed following choppy trading Thursday as investors digested a handful of economic reports.

The Dow Jones industrial average edged lower, while theS&P 500 and Nasdaq held on to slim gains.

But volume was light as investors appear to be moving to the sidelines following a decent run in U.S. stocks. The Dow and S&P 500 have climbed for four straight days, and all three major indexes are at their highest levels since early May.

In a sign that investors may be ignoring risks, CNNMoney's Fear & Greed Index ticked up to 76, an indication that investors are in "extreme greed" mode.

On Thursday, investors sifted through a batch of U.S. economic reports, including a better-than-expected drop in initial jobless claims, a narrowed trade deficit, and a surprise decline in wholesale inventories.

A duo of economic reports out of China were also in focus. Industrial production in the world's second-largest economy slowed for a third straight month in July. However, inflation in China eased to the slowest rate in two-and-a-half years.

The data fueled hopes that China's central bank might intervene with more stimulus measures to boost economic growth.

"It is worth remembering that the first benchmark rate cut was introduced only two months ago," said Mark Williams, chief China economist at Capital Economics. "The full impact of loosening to date has yet to be felt. And there is plenty of room for further stimulus."

Meanwhile, investors also continue to eye quarterly financial results. Nearly 90% of S&P 500 companies had reported their quarterly results as of Wednesday. Earnings are on pace to grow just 0.9% overall.

On the bright side, 65% of the companies topped Wall Street expectations, higher than the average rate of 62% over the past decade.

Beyond American shores, Europe remains a source of anxiety, with worries about a potential Spanish bailout particularly acute. Borrowing costs for Spain and Italy are uncomfortably high, with the Spanish 10-year yield hovering around 7% and the Italian 10-year yield just below 6%.

World markets: European stocks closed mixed. Britain's FTSE 100 gained 0.1% and France's CAC 40 rose 0.5%. The DAX in Germany fell slightly below breakeven.

Asian markets ended with solid gains. The Shanghai Composite rose 0.6%, and the Hang Seng in Hong Kong and Japan's Nikkei both added more than 1%.

China's annual inflation rate fell to 1.8% in July, the government's National Bureau of Statistics reported Thursday, down from 2.2% in June. That's the lowest inflation rate in two-and-a-half years.

Industrial production slowed to 9.2% from a year earlier in July, according to China's National Bureau of Statistics. The reading marked the slowest rate of growth since May 2009.

Economy: The number of first-time U.S. unemployment claims fell 6,000 to 361,000 last week, the government said. Analysts were expecting 375,000 claims during the week.

The U.S. trade deficit narrowed to $42.9 billion in June, from $48 billion the prior month. Analysts were expecting the deficit to stand at $47.5 billion.

Wholesale inventories unexpectedly declined 0.2% in June. Economists were looking for a 0.3% increase.

Companies: Wendy's reported a $5.5 million loss for the second quarter, but the fast food chain's stock moved higher as sales at restaurants open at least 15 months rose 3.2% during the quarter.

Kohl's posted second-quarter results that beat estimates, but sales were weaker than expected, sending shares lower. The retailer cut its forecast for the quarter and said it expects same-stores sales growth during the quarter to be flat to 2%.