Stocks slipped on Thursday after an unexpected rise in first-time claims for jobless benefits underscored concerns that the recovery in the labor market will be slow.

The report added to unease ahead of Friday's closely watched monthly jobs report and prompted a mild retreat by investors. A smaller-than-expected rise in retailers' same-store sales also weighed on stocks as investors worried about consumer spending, the other weak spot in the recovery.

Government data showed initial jobless benefit claims rose to 479,000 last week, defying analysts' expectations for a slight decline from the previous week, and offsetting Wednesday's optimism that the private sector created more jobs than expected last month.

The bottom line is that any recovery in employment is going to be very slow, said Scott Wren, senior equity strategist at Wells Fargo Advisors in St. Louis.

The Dow Jones industrial average <.DJI> dipped 26.87 points, or 0.25 percent, to 10,653.56. The Standard & Poor's 500 Index <.SPX> was off 3.42 points, or 0.30 percent, to 1,123.82. The Nasdaq Composite Index <.IXIC> lost 7.25 points, or 0.31 percent, to 2,296.32.

Energy shares led the way down as oil prices fell for a second day toward $82 a barrel. Exxon Mobil Corp shed 1.2 percent to $61.97, while the S&P energy index <.GSPE> was off 0.6 percent.

July sales at retailers rose but mostly came in below expectations as consumers cut spending to focus on essentials. Teen apparel stores saw some of the biggest disappointments as shoppers held off on back-to-school items. Among the laggards, Hot Topic Inc tumbled 4.9 percent to $5, and the Morgan Stanley retail index <.MVR> slipped 0.3 percent.

The rhetoric had gotten people fueled up that they were going to start getting back-to-school sales earlier, and it just didn't happen, said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.

Economists are forecasting Friday's U.S. Labor Department report to show a drop of 65,000 in payrolls in July as U.S. Census Bureau jobs dried up. Private employers are expected to have added 90,000 jobs.

(Additional reporting by Matthew Lynley; Editing by Padraic Cassidy)