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 by a less-than-expected 4,000 last week, dropping to 444,000 while those continuing to receive benefits unexpectedly rose.
The labor market is improving, but based on recent trends, you'd expect claims to be about 50,000 to 100,000 below where they are now, and certainly under 400,000, said Rob Stein, managing partner at Astor Asset Management in Chicago.
Tech stocks stayed 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 $64.34, while the U.S.-listed shares of SAP fell 0.3 percent to $44.76.
This M&A activity is encouraging because it's being done on the merit of the deal, not simply because they have excess borrowing power, Stein said.
Cisco Systems Inc fell 4.6 percent to $25.52 a day after its chief executive expressed caution about the economy, even as quarterly results beat expectations. The stock was the biggest drag on the Dow and the most actively-traded stock on the Nasdaq.
The Dow Jones industrial average <.DJI> was down 16.47 points, or 0.15 percent, at 10,880.44. The Standard & Poor's 500 Index <.SPX> was down 3.46 points, or 0.30 percent, at 1,168.19. The Nasdaq Composite Index <.IXIC> was down 11.73 points, or 0.48 percent, at 2,413.29.
On the earnings front, Whole Foods Market Inc jumped 5.8 percent to $42.60, 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 1.4 percent to $28.20 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 slightly outnumbering advancing ones on the New York Stock Exchange. On the Nasdaq, about three stocks fell for every two that rose.
(Editing by Jan Paschal)