Hike in jobless benefits claims dampens US stocks

NEW YORK (AP) — A surprisingly poor signal on the jobs market sent stocks slightly lower Thursday as investors remained worried about a lack of hiring.

The Dow fell 5.45, or 0.1 percent, to 10,674.96. The Standard & Poor’s 500 index fell 1.43, or 0.1 percent, to 1,125.81, while the Nasdaq composite index fell 10.51, or 0.5 percent, to 2,293.06.

The modest drop came after the Labor Department said first-time claims for unemployment benefits rose unexpectedly last week.

Investors tried to muster a late-day rally, but there wasn’t enough momentum to push the Dow Jones industrial average back into positive territory late in the day. The Dow closed down five points after dropping as much as 68 points earlier in the day. Broader indexes also fell modestly.

Volume was very thin, even for a summer day, as many traders avoid the market altogether.

The Labor Department said initial claims for unemployment benefits jumped to 479,000 last week from a 460,000 a week earlier. Economists polled by Thomson Reuters had forecast new claims would fall modestly.

The high unemployment rate in the US remains one of the biggest worries for investors. The surprise jump in claims last week suggests that employers are still reluctant to create jobs, which could keep a damper on economic growth the coming months.

“The trend is going exactly in the wrong direction,” said Phil Orlando, chief equity market strategist at Federated Investors. However, Orlando cautioned that layoffs of temporary census workers might have skewed results somewhat, and that’s why the market didn’t fall that much.

Traders will get a stronger reading on the jobs market Friday when the government releases its closely watched monthly tally of payrolls and the unemployment rate. Investors have been getting mixed signals on the economy in recent weeks, and sent stocks higher on Wednesday after payroll company ADP reported that private employers slightly increased hiring last month.

In other news, monthly retail sales reports showed shoppers remain skittish about spending as hiring remains scarce. Costco Wholesale Corp. and Limited Brands Inc. both reported big jumps in July sales, but that was compared with weak results a year ago.