Stocks slipped on Thursday as Goldman Sachs pulled financials lower and an unexpected rise in jobless claims added to bearish sentiment that put the S&P on track for its fifth day of losses in six.
Concerns about higher inflation overseas pushed investors toward defensive stocks, with the consumer staples group the S&P's top performer.
The Dow industrials turned positive, as investors bought some big names in the consumer staples sector. The Dow's top two percentage gainers were Coca-Cola Co , up 1.3 percent, and Kraft Foods Inc , up 1.6 percent.
Goldman Sachs fell 2.8 percent to $155.71 and was the biggest drag on the S&P financial sector <.GSPF>, which was the benchmark's worst-performing group, down 0.8 percent.
Late Wednesday, a report from a Senate subcommittee said Goldman had sold mortgage-linked derivatives to clients at inflated prices and misrepresented the nature of the deals.
This is a shot across the bow for Goldman, and this certainly won't be the last you'll see of headlines related to this, said Michael Mullaney, a portfolio manager who helps manage $9.5 billion at Fiduciary Trust Co. in Boston. This could stay in the forefront for the next several months and we'll see additional ramifications in the stock.
The Dow Jones industrial average <.DJI> was up 1.55 points, or 0.01 percent, at 12,272.54. But the Standard & Poor's 500 Index <.SPX> was down 1.61 points, or 0.12 percent, at 1,312.80. The Nasdaq Composite Index <.IXIC> was down 9.04 points, or 0.33 percent, at 2,752.48.
The S&P's top-performing sector was consumer staples <.GSPS> up 0.6 percent. The group's top performer was Supervalu Inc , which surged 16 percent to $10.53 after reporting strong earnings.
A lot of people are looking for defensive plays for getting into the stock market, Mullaney said. They're generally high-quality dividend-paying stocks with big overseas sales, and they've been due for a rebound.
Google is scheduled to report results after the market's close. Analysts forecast the Internet company will report revenue growth of 25 percent.
The stock rose 0.2 percent to $577.36, but options activity suggested investors were bracing for a decline in the share price after Google's earnings report.
There has been notably more put buying over the past two weeks leading up to earnings for Google, said Ryan Detrick, senior technical analyst at Schaeffer's Investment Research in Cincinnati, Ohio.
Ford Motor Co fell 2.3 percent to $14.64 after the company agreed to expand a recall of the best-selling F-150 pickup trucks. U.S. safety regulators said the recall was due to a possible short circuit that could cause airbags to deploy unexpectedly.
On the economic front, U.S. initial jobless claims unexpectedly rose in the latest week, climbing back above 400,000.
The core U.S. Producer Price Index rose faster than expected in March, adding to concerns about inflation.
In China, inflation accelerated in March at a rate as fast as 5.4 percent from a year earlier, Hong Kong media said.
(Reporting by Ryan Vlastelica; Editing by Jan Paschal)