Weaker than expected sales reports from retailers and another large number of claims for unemployment benefits left stocks with a mixed finish on Thursday, a day after the Dow Jones industrial average took its biggest dive in nearly a year.
First-time applications for unemployment benefits, an indication of how many people are losing their jobs, fell slightly last week to 422,000. That was more than economists were expecting and well above the 375,000 level that signals that the economy is adding jobs.
"Companies are just not hiring the same number of workers that they laid off two years ago, and that's leading to a very stale jobs environment," said David Loesser, the president of the Estate Planners Group, a financial advisory firm in Washington Crossing, Pa.
The Dow Jones industrial average lost 41.59 points, or 0.3 percent, to close at 12,248.55 Thursday.
The S&P 500 recouped much of its losses from earlier in the day and ended down 1.61 points, or 0.1 percent, to 1,312.94. The Nasdaq composite was up for most of the day and finished with a gain of 4.12, or 0.2 percent, at 2,773.31.
Worries that the economic recovery was stalling caused a stock market rout on Wednesday. Payroll processor ADP said private employers added just 38,000 jobs in May, down from 177,000 in April. That, along with a sharply lower reading on a key manufacturing index, sent the Dow Jones industrial average down 280 points, the steepest fall since June 4 of last year.
A series of strong corporate profit reports gave the S&P 500 its best first quarter since 1998, but the index has lost 3.7 percent since April 29 as worries over the economy deepened. The index is still up 4.4 percent for the year.
Several retailers reported muted sales growth for May, adding to concerns that the U.S. economy is straining under higher costs for raw materials like oil and cotton. Companies that catered to middle and lower income shoppers said that higher food and gas prices cut into sales. Gap Inc. fell 4.1 percent after sales fell across all its brands. Target Corp. fell 1.3 percent after missing expectations as sales traffic slowed during the second half of the month.
Luxury retailer Saks Inc. was among the few companies in the category that rose. The company gained 1.3 percent after surpassing analyst's expectations.
Financial companies fell, though less than the overall stock market. Goldman Sachs dropped 1.3 percent after the bank received a subpoena from the Manhattan District Attorney's office to discuss its role in the financial crisis. The subpoena follows the April release of a Senate report that showed Goldman had steered investors toward mortgage securities it knew would likely fail.
Many investors are turning their focus to Friday, when the government's monthly employment report will be released. Economists expect that the unemployment rate will dip down to 8.9 percent from the current 9.0 percent.
Slightly more stocks fell than rose on the New York Stock Exchange. Trading volume was 3.9 billion shares.