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* Jobless claims drop to five-year low
* Apple shares drop nearly 11 pct after results
* China, Europe PMIs lift sentiment
* 3M boosts Dow after earnings
* Netflix jumps 40 percent after reporting profit
* S&P rose 0.4 pct, Dow up 0.6 pct, Nasdaq off 0.2 pct
By Edward Krudy
NEW YORK, Jan 24 (Reuters) - The S&P 500 surged through 1,500 on its seventh day of gains, underpinned by positive economic news, even as Apple shares slid nearly 11 percent following a revenue miss.
Apple Inc 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 shares dropped 10.9 percent to $457.94, wiping out about $50 billion of its market value.
Positive economic reports helped reverse the market's earlier declines. The number of Americans filing new claims for unemployment benefits unexpectedly fell to a five-year low, and factory activity in January neared a two-year high. It was the first time the S&P 500 had risen above 1,500 since Dec. 12, 2007.
The domestic data chimed 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.
With signs the economy is improving, some investors are lauding the strength of the stock market as it shrugs off a significant slide in shares of Apple, the world's biggest company.
"The market has disconnected itself with Apple," said Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire. "I think it shows great strength in the overall S&P."
The Dow Jones industrial average gained 76.46 points, or 0.55 percent, to 13,855.79. The Standard & Poor's 500 Index rose 5.52 points, or 0.37 percent, to 1,500.33. The Nasdaq Composite Index dropped 7.67 points, or 0.24 percent, to 3,146.00.
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.
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 jumped nearly 40 percent.
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 shed 0.6 percent.
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.
Investors in U.S.-based mutual funds pumped $9.32 billion into stock funds in the week ended Jan. 16, the second consecutive week of inflows for such funds, data from the Investment Company Institute showed Wednesday.
Removing an element of political uncertainty from markets, the U.S. House of Representatives on Wednesday passed a Republican plan to allow the federal government to keep borrowing money through mid-May, clearing it for fast enactment after the top Senate Democrat and White House endorsed it.