Stocks edged lower on Thursday as an unexpected rise in initial jobless claims and unimpressive July retail sales dimmed optimism ahead of the monthly payrolls report.
Investors were cautious before Friday's jobs report, and after a 10 percent rise in the S&P 500 since July 2. Thursday's data showed initial claims for jobless benefits rose to 479,000, the highest level since early April.
The claims data today was miserable and obviously it has a negative implication for the non-farm number tomorrow, said Phil Orlando, chief equity market strategist at Federated Investors, in New York.
But the important thing tomorrow is going to be what are the organic, permanent underlying trends in private payroll, manufacturing payrolls, household survey, etc.
If Friday's employment data pushes the S&P 500 to a close above its June high, charts show there's little in the way for the benchmark to further extend the summer rally.
The S&P 500's recent consolidation just below its June high opens the door for a strong gain as the charts show little overhead resistance.
The important level is that 1,131, the intraday high on June 21. That's what we're kind of keeping an eye on, said Craig Peskin, co-head of technical analysis research at Concept Capital in New York.
He said failing to pierce 1,131 leaves the market stuck in a range, if not vulnerable to breaking lower.
And after a decisive move beyond that level the next natural resistance would be the bounce off the flash-crash low, at 1,173, Peskin said.
The Dow Jones industrial average <.DJI> slipped 5.45 points, or 0.05 percent, to 10,674.98. The Standard & Poor's 500 Index <.SPX> dropped 1.43 points, or 0.13 percent, to 1,125.81. The Nasdaq Composite Index <.IXIC> lost 10.51 points, or 0.46 percent, to 2,293.06.
Economists polled by Reuters are expecting Friday's U.S. Labor Department report to show a drop of 65,000 in non-farm payrolls in July as temporary U.S. Census Bureau jobs dried up. Private employers are expected to have added 90,000 jobs.
Weakness in consumer spending trends also stayed in focus as the 28 retailers tracked by Thomson Reuters reported July same-store sales that rose only 2.9 percent -- falling short of analysts' expectations for a 3.1 percent gain.
Among retailers, department store operator JC Penney Co Inc
The Morgan Stanley Retail index <.MVR> shed 0.4 percent.
After five straight days of gains, the Morgan Stanley Healthcare Payor index <.HMO> dropped 0.9 percent, dragged lower by Molina Healthcare Inc
The drop in Molina shares overshadowed a 5.6 percent gain in Cigna Corp
Shares of grain companies like Archer Daniels Midland
Consuming nations that have depended on Russia for their wheat supplies could turn to the United States -- the world's top wheat exporter -- for supplies in view of Russia's ban that was announced on Thursday by Prime Minister Vladimir Putin.
Share of meat companies like Tyson Foods
Volume was light, with about 6.49 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, the third lowest for the year and well below last year's estimated daily average of 9.65 billion.
Declining stocks outnumbered advancing ones on the New York Stock Exchange by a ratio of about 17-to-13, while on the Nasdaq, about two stocks fell for every one that rose.
(Reporting by Chuck Mikolajczak; Additional reporting by Doris Frankel and Rodrigo Campos; Editing by Jan Paschal)