* Chinese manufacturing picks up, boosts commodities
* U.S. manufacturing growth slows
* S&P hits resistance at 1,150 level
* Dow up 0.4 pct, S&P up 0.4 pct, Nasdaq up 0.1 pct (Updates to early afternoon trading, changes byline)
By Ryan Vlastelica
NEW YORK, Oct 1 (Reuters) - U.S. stocks advanced modestly on the first day of the fourth quarter on Friday as resource stocks built on recent gains despite data showing a slowed pace of manufacturing growth in September.
The ISM manufacturing report offset enthusiasm earlier in the morning generated by data out of China showing a pick-up in its manufacturing sector and left the door open for the Federal Reserve to launch a fresh round of monetary policy easing.
A mixed round of U.S. data left the market searching for direction as construction spending rose unexpectedly in August, while September consumer sentiment improved slightly, but remained at its weakest level in more than a year.
The data "could signal that we have a little downdraft going here," said Brian Battle, vice president of trading at Performance Trust Capital partners in Chicago. "It is very difficult to be an investor right now because signals are being crossed."
The S&P 500 also hit a key resistance level after it climbed as high as 1,150.30 before losing ground. That level is viewed as the top of a recent range after stocks surged through September.
Technology shares ranked among the laggards as investors locked in some profits the day after indexes wrapped up the best quarter in a year. Amazon.com was among the biggest drags on the Nasdaq, down 2.7 percent at $152.82.
"I think we're seeing a little profit taking in momentum stocks -- names like Amazon, Priceline and Netflix, which were big winners last quarter," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.
Netflix dropped 3.8 percent to $155.98. The online video rental company's stock was downgraded to "negative" from "neutral" at Susquehanna. Priceline shares slipped 2.4 percent to $340.00.
The Dow Jones industrial average was up 44.50 points, or 0.41 percent, at 10,832.55. The Standard & Poor's 500 Index was up 4.61 points, or 0.40 percent, at 1,145.81. The Nasdaq Composite Index up 2.49 points, or 0.11 percent, at 2,371.12.
On the upside, resource stocks gained as metal and oil prices returned to recent new highs. Shares of Freeport McMoRan Copper and Gold Inc rose 3.1 percent to $88.04 and Occidental Petroleum Corp rose 3.1 percent to $80.73.
In corporate news, shares of Hewlett-Packard fell 3.4 percent to $40.66 after the company named former SAP Chief Executive Leo Apotheker as its new CEO and president.
Bank of America-Merrill Lynch on Friday downgraded Caterpillar Inc, a maker of heavy equipment, to "neutral" from "buy," saying that after a recent run-up in the shares, it saw limited upside. The Dow component was off 0.2 percent at $78.50.
William Dudley, the president of the Federal Reserve Bank of New York, said that a double-dip recession wasn't likely, but that more action by the Fed to boost growth would probably be needed if the economic outlook didn't improve. (Reporting by Ryan Vlastelica; Editing by Jan Paschal)