Stocks fell on Thursday as investors turned cautious a day ahead of a crucial government report on July employment, and took profits after recent strong gains.
The stock market's second day of declines came on the heels of a four-day rally that pushed U.S. indexes on Tuesday to close at their highest levels since last fall.
Obviously, everyone looks at the employment number as potentially market moving, so there could be a little trepidation ahead of that report, said Todd Salamone, vice president of research at Schaeffer's Investment Research in Cincinnati, Ohio.
Losses were broad-based, with the consumer staples and telecommunications services sectors among the drags on the S&P 500. An S&P index of consumer staples stocks <.GSPS> fell 0.9 percent, while an S&P index of telecom services shares <.GSPL> lost 1.2 percent.
Procter & Gamble Co
Another Dow component, Cisco Systems Inc
After losing ground in morning trading, Cisco rose 0.6 percent to close at $22.308 on the Nasdaq.
Wall Street's attention is now on the government's all-important non-farm payrolls report, which will show the number of jobs lost in July. The data will be released before the bell on Friday.
A Reuters survey forecasts that the Labor Department report will show 320,000 workers lost their jobs in July, the least for any month since September last year.
The Dow Jones industrial average <.DJI> declined 24.71 points, or 0.27 percent, to 9,256.26. The Standard & Poor's 500 Index <.SPX> fell 5.64 points, or 0.56 percent, to 997.08. The Nasdaq Composite Index <.IXIC> slid 19.89 points, or 1 percent, to 1,973.16.
After the closing bell, shares of graphics chipmaker Nvidia Corp
In the regular session, shares of low-cost wireless carrier MetroPCS
Despite the latest pullback, the broad S&P 500 is up 47.4 percent from its 12-year closing low in early March. The rally has been driven by a string of economic data suggesting a recovery, and an earnings season with most S&P 500 companies beating expectations.
Before the opening bell, numbers from the Labor Department showed initial jobless claims fell 38,000 to a seasonally adjusted 550,000 for the week ended August 1, down substantially from the 588,000 the previous week. The latest weekly claims were well below the forecast calling for 580,000.
Positive data also came from July retail sales, as some U.S. retailers reported sales declines that were not as steep as expected. Investors are looking for signs of life among recession-weary consumers to help underpin a potential economic recovery.
The S&P retail index <.RLX> was up 1.1 percent.
During the regular session, volume was below average on the New York Stock Exchange, with 1.38 billion shares changing hands, under last year's estimated daily average of 1.49 billion, while on the Nasdaq, about 2.45 billion shares traded, above last year's daily average of 2.28 billion.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 3 to 2, while on the Nasdaq, about nine stocks fell for every four that rose.
(Reporting by Rachel Chang; Additional reporting by Leah Schnurr; Editing by Jan Paschal)