U.S. stocks fell on Thursday as the dollar rebounded, diminishing the appetite for risky assets, while FedEx forecast profits below estimates and Citigroup got a cool reception for its stock offering.

An unexpected increase in applications for jobless benefits highlighted the spotty nature of the U.S. economic rebound and contrasted against an index that showed factory activity accelerated rapidly in the U.S. Mid-Atlantic region.

Among the top decliners were financial shares, hurt by prospects of less liquidity, as the Fed plans to terminate most of its emergency lending facilities on February 1.

The dollar isn't helping the market. The cyclical trade has been one of the leaders in terms of influencing the market, and it is continuing to exert pressure on equities, said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut.

The markets have had a big recovery from their lows, and right now traders are looking to more or less nail down some profits.

The Dow Jones industrial average <.DJI> dropped 83.66 points, or 0.80 percent, to 10,357.46. The Standard & Poor's 500 Index <.SPX> fell 7.06 points, or 0.64 percent, to 1,102.12. The Nasdaq Composite Index <.IXIC> lost 15.54 points, or 0.70 percent, to 2,191.37.

Citigroup Inc slid 7.5 percent to $3.19 after the bank's stock and bond offering attracted weak demand and priced much lower than expected, prompting the U.S. Treasury to delay a plan to sell its stock in the bank.

A government official said the Treasury plans to sell its Citi stake within 12 months.

Package delivery giant FedEx Corp, a bellwether for the economy, forecast third-quarter profit below expectations, sending shares down 4.8 percent to $85.65.

Shares of FedEx rival United Parcel Service Inc dropped 1.3 percent to $58.25, and the Dow Jones Transportation average <.DJT> fell 1 percent.

The Fed voted Wednesday to keep interest rates at historic lows, but the U.S. dollar strengthened as the Fed said economic activity has continued to pick up.

Growing concerns about Greece's fiscal health weighed on the euro and further lifted the greenback. The dollar index <.DXY> jumped 1 percent.

(Additional reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)

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