(CBS) — Stocks closed lower Thursday, but traded well off early session lows, as soft economic data out of China and increased expectations of a December Federal Reserve interest rate hike put investors in a selling mood.

The S&P 500 dropped 6, the NASDAQ lost 25, and the Dow Jones Industrial Average closed down 45 points, settling to 18,098.

“It looked like it was going to be a rout in the morning and then stocks came back rather strongly. One of the things that I thought was particularly positive was the rebound in the transportation stocks,” says Chuck Carlson, CEO of Horizon Investment Services.

He also noted that the time test Dow Theory has now turned positive and gives investors the all clear sign.

Watch & Listen LIVE