By Anna Isaac

U.S. stocks were little changed shortly after the opening bell Friday, as investors digested recent weak data amid thin trading volumes during the peak summer vacation period.

The Dow Jones Industrial Average fell 23 points, or less than 0.1%, and the S&P 500 also dropped less than 0.1%. The tech-heavy Nasdaq Composite was little changed, a day after the benchmark reached its 35th record close for the year.

Investors continued to try to reconcile signals that the economic recovery may be uneven with expectations of further stimulus from governments and central banks, which might push more cheap money into financial markets. With government bonds in many developed countries offering yields that are below expected inflation levels, investors in recent months have been flooding into risky asset classes including stocks in a search for higher returns.

"More so than ever before, equity markets probably are not the best reflection of real economic conditions in the U.S.," said Derek Halpenny, head of research for global markets in the European region at MUFG Bank. "The market's convinced that the Fed will do more if required, and therefore the risk of not being long equities is higher than not being in it. That helps to keep the market supported."

Data on Thursday showing an unexpected increase in new weekly applications for unemployment benefits was seen as a troubling sign that the American labor market's recovery may be cooling amid continuing disruptions because of the coronavirus pandemic.

"If the data we got yesterday were to continue, the impact on earnings would demand an equity correction at some point," Mr. Halpenny said. The stock market's rally seems fragile particularly because a handful of very large technology companies have driven the advance, while a large number of other stocks remain in the red for this year, he said.

In bonds, the yield on the benchmark 10-year U.S. Treasury ticked lower to 0.632%, from 0.644% Thursday.

Investors' concerns about a deepening escalation in tensions between Beijing and Washington were eased slightly by the prospect of talks in the near term. U.S. and Chinese officials will soon talk on the phone over trade issues, China's Ministry of Commerce said Thursday, after the negotiations were reportedly rescheduled.

"If U.S.-China plays out as a war of words, rather than actions, then the market can shrug it off," said Edward Park, deputy chief investment officer at Brooks Macdonald. "Anything more structural, such as a renegotiation of the phase-one agreement, would unsettle markets."

Preliminary data from research firm IHS Markit on whether manufacturers and the services sector saw an improvement in the operating environment in August from the previous month is due out at 9:45 a.m. ET. Investors will also get more insights into the state of the American housing market at 10 a.m. ET, when the National Association of Realtors is scheduled to release data on existing-home sales for July.

Shares of agricultural-equipment maker Deere & Co. rose 4% after the company posted better-than-expected profit and sales figures on Friday.

Meanwhile shares in Pinduoduo tumbled 10% after the China-based e-commerce platform company reported a surprise second-quarter profit but sales which were lower than expected.

The ICE U.S. Dollar Index, which measures the greenback against a basket of other currencies, rose 0.5% Friday.

Overseas, the pan-continental Stoxx Europe 600 also slipped nearly 0.9%, while most major Asian equity benchmarks ended the day higher.

The euro dropped 0.6% against the dollar after data showed a smaller-than-expected rebound in the eurozone's manufacturing and services sectors. The currency also came under pressure after Michel Barnier, the European Union's chief Brexit negotiator, told a press conference Friday that a deal with the U.K. was unlikely at this stage. The British pound fell 0.9% against the dollar.

Write to Anna Isaac at anna.isaac@wsj.com