US STOCKS-Wall St higher in late trading, Russell up 1.3 pct

By Caroline Valetkevitch

NEW YORK, Oct 2 (Reuters) - U.S. stocks edged higher in late afternoon trading on Thursday, rebounding with small caps after this week's sharp losses.

The Russell 2000 index of small-cap shares was up 1.3 percent, reversing earlier losses. It is now down about 9.1 percent from its record close, exiting correction territory, which is defined as a 10 percent drop from a peak.

The benchmark S&P 500 index was back above its 150-day moving average, a level it hasn't closed below since November 2012.

"Some people might have stepped into the Russell because they felt that this was as far as the decline was going to go. However, equity markets are directionless and people aren't quite sure where things are going. Consequently, a lot of traders are sitting off to the sidelines," said Mark Grant, managing director at Southwest Securities in Fort Lauderdale.

The Dow Jones industrial average was rising 40.04 points, or 0.24 percent, to 16,844.75, the S&P 500 was gaining 4.89 points, or 0.25 percent, to 1,951.05 and the Nasdaq Composite was adding 17.87 points, or 0.4 percent, to 4,439.95.

The largest percentage gainer on the New York Stock Exchange was Wayfair, rising 27.21 percent in its trading debut, while the largest percentage decliner was Atento SA, down 13.20 percent.

Advancing issues were outnumbering declining ones on the NYSE by 1,747 to 1,278, for a 1.37-to-1 ratio on the upside; on the Nasdaq, 1,784 issues were rising and 886 falling for a 2.01-to-1 ratio favoring advancers.

The benchmark S&P 500 index was posting 3 new 52-week highs and 25 new lows; the Nasdaq Composite was recording 21 new highs and 156 new lows. (Editing by Nick Zieminski)