U.S. stocks hovered near break-even on Thursday as an uptick in jobless claims failed to dent sentiment following surprisingly strong data on private-sector jobs creation a day earlier.
But consumer shares tumbled as several top U.S. retailers missed estimates for December sales after a post-Christmas blizzard that slowed a two-month shopping spree.
Target Corp fell 6.1 percent to $55.33, and the S&P retail index <.RLX> dropped 1 percent.
Retailer stocks rallied at the end of last year but results are coming in that do not suggest something they can build upon. Consequently you take profits, said Joe Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania.
New jobless claims rose more than expected for the week, but the four-week average dropped to a more than 2-year low, indicating labor market improvement remained intact. Economists raised forecasts for the widely followed government payrolls numbers due Friday.
Based on Thursday's market valuation, investors expected a solid jobs data Friday, said Battipaglia.
It will be a good jobs number and a disappointing unemployment number, and we're going to need even greater numbers to dent unemployment, and that's going to be a challenge, he said.
The Dow Jones industrial average <.DJI> dipped 11.50 points, or 0.10 percent, to 11,711.39. The Standard & Poor's 500 Index <.GSPC> lost 0.89 points, or 0.07 percent, to 1,275.67. The Nasdaq Composite Index <.IXIC> gained 3.66 points, or 0.14 percent, to 2,705.86.
Technology shares were lifted after Microsoft Corp took a big step away from its alliance with Intel Corp to team up with Britain's ARM Holdings in the red-hot tablet and smartphone arena. U.S.-listed ARM shares rose 6.4 percent to $23.29, Intel fell 1.3 percent to $20.67.
In a note Wednesday, Citigroup said it expected 2011 to be a year of strong but uneven global growth and upgraded U.S. equities to neutral.
After hitting a high near 1,278 on Wednesday and on the heels of better economic data, the S&P 500 faces resistance in the 1,300-1,325 area, according to Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
Short-term support for the S&P is seen around 1,258, the 2010 close and the current 50-day moving average.
(Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)