* Dow, S&P pare losses to edge above 200-day moving average
* Breakthrough seen unlikely in US-China trade talks
* Tesla sinks after Musk snubs analysts' questions on call
* Dow up 0.16 pct, S&P down 0.15 pct, Nasdaq down 0.05 pct (Updates to late afternoon, changes byline, adds NEW YORK to dateline)
By April Joyner
NEW YORK, May 3 (Reuters) - U.S. stocks were mixed on Thursday, seesawing between positive and negative territory during the session as strong economic data offset disappointing earnings reports from several companies.
A sharp drop after the open had pushed the S&P 500 and the Dow Jones Industrial Average below their 200-day moving averages, a key technical indicator of longer-term momentum, but both indexes pared losses to rise back above those levels.
At 3:16 PM ET, the Dow Jones Industrial Average rose 37.37 points, or 0.16 percent, to 23,962.35, the S&P 500 lost 3.97 points, or 0.15 percent, to 2,631.7 and the Nasdaq Composite dropped 3.73 points, or 0.05 percent, to 7,097.16.
Shares of insurer American International Group Inc and drug distributor Cardinal Health Inc plunged after the companies reported quarterly results. AIG, down 6.2 percent, and Cardinal Health, down 19.6 percent, were among the biggest drags on the S&P 500.
On the other hand, U.S. economic data provided a more upbeat outlook. The number of Americans receiving unemployment aid fell to its lowest since 1973, and the U.S. trade deficit narrowed for the first time in seven months. Factory orders for March also rose.
While it is considered highly unlikely the U.S. delegation in Beijing will strike a breakthrough deal to fundamentally change China's economic policies, a package of short-term Chinese measures could delay a U.S. decision to impose tariffs on about $50 billion worth of Chinese exports.
"Everything is looking good from an economic perspective," said Chris Zaccarelli, chief investment officer of Independent Advisor Alliance in Charlotte, North Carolina. "It's little snippets of negative stories coming out of earnings calls. There's a yo-yo effect."
Tesla Inc shares fell 5.6 percent after Chief Executive Officer Elon Musk cut off analysts asking about the company's profit potential, despite promises that production of the troubled Model 3 electric car was on track.
Shares of Spotify Technology SA dropped 6.6 percent after the music-streaming company's results, in line with analyst estimates, underwhelmed investors. Spotify made its debut as a public company in April.
Declining issues outnumbered advancing ones on the NYSE by a 1.31-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favored decliners.
The S&P 500 posted seven new 52-week highs and 37 new lows; the Nasdaq Composite recorded 52 new highs and 70 new lows. (Additional reporting by Sruthi Shankar in Bengaluru Editing by Chris Reese)