Stocks slip as investors take break from rally

NEW YORK -- A surprise drop in unemployment claims couldn't fuel another day of gains for the stock market.

Stocks posted modest losses Thursday after a three-day advance. Traders found little in the weekly employment data, or in reports on housing and manufacturing, to provide new encouragement about an economic recovery.

Lackluster earnings reports from FedEx Corp. and Oracle Corp. added to investors' caution.

The stock market has risen in eight of the past 10 days and hopes for a recovery have propelled the Standard & Poor's 500 index up 57.5 percent from a 12-year low in early March. The pace of the gains has brought warnings from analysts that stocks have risen too quickly.

"This market has become kind of saturated with good news," said Jeff Kleintop, chief market strategist at LPL Financial.

The Labor Department said workers filing for jobless claims for the first time dipped to 545,000 last week from an upwardly revised 557,000 the previous week. Economists polled by Thomson Reuters were expecting claims to rise.

The Dow Jones industrial average fell 7.79, or 0.1 percent, to 9,783.92. On Wednesday, the Dow jumped 108 points to a high for the year.

The S&P 500 index fell 3.27, or 0.3 percent, to 1,065.49, and the Nasdaq composite index fell 6.40, or 0.3 percent, to 2,126.75.

Kleintop is encouraged that some of the market's recent gains have been moderate and that investors remain skeptical. The counterintuitive logic of Wall Street would argue that all the predictions of a slide could keep the rally going.

"It's been kind of a steady grind over time bringing investors kind of kicking and screaming back into this market," he said.

Bond prices jumped, pushing yields lower. The yield on the benchmark 10-year Treasury note fell to 3.39 percent from 3.48 percent late Wednesday.

Among stocks, FedEx fell $1.74, or 2.2 percent, to $76.46 and Oracle slid 61 cents, or 2.8 percent, to $21.52.

The dollar was mixed against other currencies, while gold prices fell.

Crude oil fell 3 cents to settle at $72.47 per barrel on the New York Mercantile Exchange.

About three stocks fell for every two that rose on the New York Stock Exchange, where volume came to 1.5 billion shares compared with 1.6 billion Wednesday.