U.S. stocks fell on Thursday, following the best three-day run in 10 months as lackluster jobless data underscored difficulties facing the labor market and offset optimism after a multibillion-dollar tech deal.
The number of workers filing new applications for jobless benefits fell less than expected last week, while those continuing to receive benefits unexpectedly rose.
The labor market is improving, but not nearly fast enough, said Joseph Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania. It remains very fragile and that's why consumers remains cautious.
Tech stocks were in focus after German software company SAP AG agreed to buy smaller U.S. rival Sybase Inc for $5.8 billion. Sybase jumped 14.6 percent to $64.35, while the U.S.-listed shares of SAP fell 0.6 percent to $44.65.
Cisco Systems Inc fell 4.2 percent to $25.62 a day after its chief executive expressed caution about the economy, even as quarterly results beat expectations. The stock was the heaviest percentage drag on the Dow.
Cisco is probably seeing a recovery, but they're going to be a little cautious and make sure that all the spending is in the pipeline, said Thomas Nyheim, vice president and portfolio manager at Christiana Bank & Trust Co in Greenville, Delaware.
The Dow Jones industrial average <.DJI> was down 25.54 points, or 0.23 percent, at 10,871.37. The Standard & Poor's 500 Index <.SPX> was down 5.06 points, or 0.43 percent, at 1,166.61. The Nasdaq Composite Index <.IXIC> was down 11.94 points, or 0.49 percent, at 2,413.08.
The energy sector led the way down as June crude oil futures fell 1.8 percent below $75 per barrel. Dow component Chevron Corp fell 1.4 percent to $78.94.
On the upside, Whole Foods Market Inc jumped 5.7 percent to $42.56, boosting consumer stocks after its quarterly profit topped estimates and it raised its full-year forecasts.
U.S.-listed shares of Sony Corp fell 3.7 percent to $32 after it forecast a full-year operating profit that was below expectations.
Morgan Stanley rose 1 percent to $28.09 after FBR Capital Markets upgraded the stock to outperform, expecting it to gain market shares in its institutional trading division.
Elsewhere on the economic front, U.S. import prices rose a touch more than expected in April as petroleum prices surged, a government report showed, though a small gain in costs, excluding petroleum, pointed to tame inflation pressure.
Trading was choppy, with declining stocks outnumbering advancing ones on the New York Stock Exchange by a ratio of about 16 to 13. On the Nasdaq, about three stocks fell for every two that rose.
(Editing by Jan Paschal)