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* Jobless claims drop to five-year low
* Apple shares drop after results
* Netflix jumps 40 percent after reporting profit
* Indexes: Dow up 0.62 pct, S&P up 0.38 pct, Nasdaq off 0.19 pct
By Chuck Mikolajczak
NEW YORK, Jan 24 (Reuters) - The Dow and S&P 500 advanced on Thursday, with the benchmark S&P index moving through the 1,500 level as solid economic data enabled investors to shrug off a steep decline in Apple shares.
Apple Inc dropped 10.1 percent to $462.17 after the technology giant missed Wall Street's revenue forecast for a third straight quarter as iPhone sales were poorer than expected, fanning fears its dominance of consumer electronics is slipping.
The drop wiped out roughly $50 billion in Apple's market capitalization to $435 billion, leaving the company vulnerable to losing its status as the most valuable U.S. company to second place ExxonMobil Corp, at $417 billion.
A trio of economic reports helped buoy the market, with data showing a decline in weekly jobless claims and an increase in manufacturing, while a gauge of future economic activity climbed.
"The S&P is up, that is a very important inflection point that a stock such as Apple can take a hit and the market can stay strong - that is because the U.S. economy is broadly getting stronger across the board," said Mike Binger, portfolio manager at Gradient Investment in Shoreview, Minnesota.
"Apple has been topping the headlines for the last three to four years. That phase is obviously past us and people are starting to talk about different stocks and they are gravitating towards different stocks."
The gains marked the first time the S&P 500 had risen above 1,500 since Dec. 12, 2007 and put the index on pace for its seventh straight advance.
The advance for the S&P, and muted declines in the Nasdaq in spite of the decline in Apple, were viewed as a positive sign, as investors take encouragement from an improving global economy and move into stocks more closely tied to economic fortunes, such as industrials.
General Electric rose 1 percent to $22.16 and United Parcel Service gained 2 percent to $81.98. Of the 10 major S&P sectors, only technology, off 1.3 percent, was lower.
The Dow Jones industrial average gained 85.42 points, or 0.62 percent, to 13,864.75. The Standard & Poor's 500 Index gained 5.69 points, or 0.38 percent, to 1,500.50. The Nasdaq Composite Index dropped 5.84 points, or 0.19 percent, to 3,147.83.
The domestic data was in sync with those overseas showing growth in Chinese manufacturing accelerated to a two-year high this month and a buoyant Germany took the euro zone economy a step closer to recovery.
Apple's disappointing results drew a round of price-target cuts from brokerages. At least 14 brokerages, including Barclays Capital, Credit Suisse and Deutsche Bank, cut their price target on the stock by $142 on average. Morgan Stanley removed the stock from its 'best ideas' list.
In contrast to Apple, Netflix Inc surprised Wall Street Wednesday with a quarterly profit after the video subscription service added nearly 4 million customers in the U.S. and abroad. Shares surged 36.9 percent to $141.36, its biggest percentage jump ever.
Diversified U.S. manufacturer 3M Co reported a 3.9 percent rise in profit, meeting expectations, on solid growth in sales of its wide array of products, which range from Post-It notes to films used in television screens. The shares edged up 0.2 percent to $99.66.
Corporate earnings have helped drive the recent stock market rally. Thomson Reuters data through early Thursday showed that of the 133 S&P 500 companies that have reported earnings, 66.9 percent have exceeded expectations, above the 65 percent average over the past four quarters.