Apple Inc dropped 12 percent to $452.26 after the technology icon missed Wall Street's revenue forecast for a third straight quarter and threatened to topple it from its ranking as the most valuable U.S. company.
The strong downward push from Apple was partially offset by surprisingly strong economic signals. U.S. factory activity grew the most in nearly two years in January and the number of new claims for jobless benefits dropped to a five-year low last week.
A third report showed the Conference Board's Leading Economic Index rose last month, pointing to improved U.S. growth ahead.
"You have Apple and technology on the one side and the rest of the market on the other side," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York.
Initial U.S. stock gains pushed the S&P 500 to rise above the 1,500 mark for the first time since Dec. 12, 2007 and put the benchmark index on pace for its seventh straight advance, its longest streak since October 2006.
The Dow Jones industrial average was up 48.85 points, or 0.35 percent, at 13,828.18. The Standard & Poor's 500 Index was up 0.18 points, or 0.01 percent, at 1,494.99. The Nasdaq Composite Index was down 22.44 points, or 0.71 percent, at 3,131.23.
MSCI's world equity index rose 0.15 percent to 353.20, lifted by business surveys showing growth in Chinese manufacturing accelerated to a two-year high in January.
The FTSE Eurofirst 300 index of top European shares closed up 0.29 percent at 1,171.06 on signs of growth in Germany, which bolstered expectations that the region's sovereign debt crisis may be easing.
"Leading economic indicators rose, new jobless claims are at the lowest level in many years, and Chinese manufacturing data moved to a positive trajectory," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey, with more than $1 trillion in assets under management. "The Chinese data bodes well for demand which translates into top line revenue growth. If global demand goes up, it's good for U.S. equities."
The benchmark 10-year Treasury note fell 5/32 in price to yield 1.8436 percent, as investors moved funds into stocks.
"It's a reach for return in the equities market," said Todd Colvin, senior vice president of global institutional sales with R.J. O'Brien & Associates in Chicago. "Risk takers are being rewarded so far this year."
January's flash euro zone purchasing managers index pointed to more weakness ahead for a region already mired in recession. But it also hinted at improvement later in the year.
"The pace of recession is clearly easing," said Marco Valli, chief euro zone economist at UniCredit.
The data showed the contrasting fortunes of Germany and France, with German activity at its strongest levels in a year and the French PMI at its lowest level since March 2009.
The growing confidence in the pace of China's economic recovery helped keep Brent crude oil above $113 a barrel. Gold fell $16.44 to $1,668.70 an ounce.
U.S. crude futures rose 72 cents to settle $95.95 a barrel.
The yen tumbled against the dollar, snapping a three-day advance, after a Japanese economic official said the government has no problem with the dollar hitting 100 yen.
The Japanese currency has weakened to about 90 per dollar from 80 since November on expectations Prime Minister Shinzo Abe will force the central bank to ease monetary policy to combat deflation.
The dollar was up 1.57 percent at 89.98 against the yen, while the euro rose 0.41 percent at $1.3371.