NEW YORK (AP) -- Investors recovered their poise by midday Thursday after an early sell-off sent stocks sharply lower.

U.S. markets fell immediately after the opening bell following a global slump prompted in part by an unexpectedly weak report on manufacturing in China. Concern that the Federal Reserve might ease back on its economic stimulus program sooner than expected had also riled investors.

Any pullback, or tapering, by the Fed of its economic stimulus would be a clear signal from the central bank that the economy was strengthening, said Joe Quinlan, chief market strategist at U.S. Trust. The central bank has made it clear, however, that it still thinks the U.S. economy needs support in the form of ultra-low interest rates and a large-scale bond-buying program.

"When the Fed starts to taper, the fundamentals of the U.S. economy have improved even further than we have already seen," said Quinlan. "The Fed tapering is actually a good story for U.S. equities and the economy."

The minutes from the latest Fed meeting, released Wednesday afternoon, indicated that several policymakers are leaning toward slowing the bond-buying program. That program has been keeping interest rates low and encouraging investors to buy risky assets like stocks.

The Dow Jones industrial average was up eight points at 15,313 as of 12:30 p.m. Eastern Daylight Time, a decline of 0.04 percent. It had been down 127 points in the early going following steep losses in European and Japanese markets.

The Dow is still up 16.8 percent this year, driven by a pickup in hiring at U.S. employers, a recovery in the housing market and record profits at U.S. corporations.

On Thursday, investors were disappointed by a report that showed manufacturing in China, the world's No. 2 economy, unexpectedly shrank this month. China's booming economy has been a major driver of global growth in recent years and investors worry when they see signs that it's slowing down.

Encouraging news about the U.S. economy also helped the stock market.

Sales of new homes rose in April to the second-highest level since the summer of 2008, the Commerce department said Thursday. Also, the median price for a new home hit a record high, another sign that housing is recovering.

There was good news on the labor market, too.

The number of Americans applying for unemployment benefits fell 23,000 last week to 340,000, a level consistent with solid job growth. That suggests employers are laying off fewer workers. The decline in claims has coincided with steady job growth over the past six months.

Global stock markets fell sharply on Thursday, starting in Asia. Japan's Nikkei index fell 7.3 percent after Japanese government bond yields rose sharply and news was released about the slowdown in Chinese manufacturing. The sell-off extended to Europe, where Germany's DAX index, which has been at a record high, slid 2.1 percent.

In other U.S. stock trading, the Standard & Poor's 500 index was down two points to 1,653, or 0.1 percent. The Nasdaq composite was little changed at 3,463.

In commodities trading, the price of crude oil slipped 39 cents, or 0.3 percent, to $93.90 a barrel. Gold rose $15, or 1 percent, to $1,382.20 an ounce. The dollar fell against the euro and the yen.

In U.S. government bond trading, the yield on the benchmark 10-year Treasury note was unchanged from late Wednesday at 2.04 percent.

Among stocks making big moves, Ralph Lauren fell $5.06, or 2.7 percent, to $183. The apparel seller reported revenue that fell short of what financial analysts were expecting. Sluggish economic conditions and the decision to cut certain businesses reduced sales.

PC maker Hewlett-Packard surged $3, or 14 percent, to $24.22, after the company delivered second-quarter earnings that topped the estimates of both its own management and financial analysts.