New Delhi, Dec. 7 -- In the shadow of a looming Federal Reserve decision, Wall Street closed Thursday with a tentative grip on record highs, as mixed economic signals fueled a day of choppy trading and heightened anticipation for Friday's inflation data. The S&P 500 notched a modest gain, extending its winning streak to four sessions and flirting with all-time peaks, while the Dow Jones Industrial Average ended nearly flat and the Nasdaq Composite eked out a slight advance. Small-cap stocks, however, stole the spotlight, with the Russell 2000 surging to a fresh record amid bets on looser monetary policy.

Traders parsed a deluge of labor market data that painted a contradictory picture: jobless claims unexpectedly plunged to their lowest ...