Stocks were on track for a third day of losses on Thursday after jobless claims data failed to meet heightened market expectations as stocks come off their best first quarter in 14 years.
New U.S. jobless claims fell to a 4-year low last week but still missed forecasts, while the prior week's number was revised up. After a period of improvement, analysts said the report showed signs of stalling, a worry for investors.
The data today is evidence that we're not going to have the robust recovery we had been expecting. The economy is growing, and the labor market is healing, but both on a very slow basis, said Michael Yoshikami, chief executive officer at Destination Wealth Management in Walnut Creek, California.
Separately, U.S. household income grew at a faster pace in the fourth quarter than previously thought, which should help underpin spending this quarter.
The S&P 500 is up 10.9 percent this quarter, its best start to the year since 1998 and its best quarter since the third period of 2009.
Some analysts are looking for a market pullback early in the second quarter after the strong early run as investors seek confirmation the economy is not about to slow.
We've had an incredible rally, and in order for us to keep moving up, we're going to need data that is very strongly positive, not just lukewarm, Yoshikami said.
The Dow Jones industrial average <.DJI> dropped 82.91 points, or 0.63 percent, at 13,043.30. The Standard & Poor's 500 Index <.SPX> was down 13.25 points, or 0.94 percent, at 1,392.29. The Nasdaq Composite Index <.IXIC> slid 31.86 points, or 1.03 percent, at 3,073.10.
All ten S&P sectors fell, with financials <.GSPF>, a group closely tied to economic growth prospects, down 1.8 percent. Wells Fargo & Co
The S&P is off only 0.1 percent this week, with the day's decline erasing a strong rally on Monday.
Best Buy Co Inc
Red Hat Inc
(Editing by Jeffrey Benkoe)