U.S. stocks declined in early trade on Thursday as political crisis in Egypt overshadowed better-than-expected economic reports on weekly jobless claims, non-farm productivity and monthly factory orders.

The S&P 500 Index declined 4.73 points, or 0.36 percent, to trade at 1,299.55 at 10:55 a.m. EDT. The Dow Jones Industrial Average declined 21.34 points, or 0.18 percent, to trade at 12,020.63. The Nasdaq Composite Index fell 0.35 percent.

The Egyptian army has moved to divide pro and anti government protesters on Thursday, amid reports that demonstrators from both sides were heading back to Tahrir square in Cairo, the site of Wednesday clashes which left at least 5 dead.

The Department of Labor reported that initial jobless claims declined by 42,000 to 415,000 for the week ended January 29 from the previous week's revised figure of 457,000, while economists expected 425,000. The 4-week moving average of initial claims increased 1,000 to 430,500 from the previous week's revised average of 429,500.

The weekly jobless claims data comes a day ahead of the government's monthly nonfarm payrolls report, which is the most closely-watched economic data pertaining to the jobs market and is a key gauge for the direction and pace of the economic recovery.

Nonfarm productivity in the US increased by 2.6 percent in the fourth quarter last year, compared with the same quarter in the previous year and against markets expectations of 2.2 percent gain.

The Institute for Supply Management’s non-manufacturing index rose to 59.4 percent in January, compared with 57.1 percent in December and against analyst’s estimation of 57.0 percent. Factory orders rose 0.2 percent in December against 0.4 percent decline expected by economists.

On the corporate front, Merck & Co Inc. (NYSE:MRK) shares declined 2.93 percent. The company reported fourth quarter net loss of $531 million or $0.17 per share compared to a net profit of $6.49 billion or $2.35 per share in the same period last year.

Cvs Caremark Corp. (NYSE:CV) shares declined 4.91 percent to $32.95. The company expects fiscal 2011 earnings in the range of $2.72 to $2.82 per share against analysts’ estimation of $2.88 per share.

The euro declined 1.33 percent to 1.3628 against the dollar and the yen declined 0.35 percent against the greenback.

Crude oil futures declined 0.69 percent to $90.23/barrel and gold futures fell 0.27 percent.