Stocks fall after claims for unemployment benefits rise unexpectedly

Stocks drop as jobless claims rise unexpectedly

NEW YORK — Stocks fell Thursday after the Labor Department said claims for unemployment benefits rose unexpectedly last week, renewing concerns about the pace of the economic recovery.

The disappointing news about the jobs market came minutes after news that Intel Corp. was acquiring McAfee Inc. The deal, valued at $7.68 billion, helped to cushion the blow from the jump in unemployment benefit claims.

The Dow Jones industrial average fell 29 in early morning trading. Broader indexes also fell.

The two announcements are the latest to provide a conflicting picture of the recovery. Economic reports have regularly shown the pace of a rebound is slowing and companies are skittish about adding new workers. That has hurt stocks on some days in recent weeks. It has also stoked fears about the economy falling back into recession.

At the same time, corporate announcements, including earnings reports for the past six weeks, have largely showed companies are doing well. Mergers and acquisitions activity is often considered a positive sign because it means companies are willing to spend money to grow their businesses and are confident that prospects are improving.

The Labor Department said initial claims for unemployment benefits rose by 12,000 to 500,000 last week from an upwardly revised 488,000 a week earlier. Economists polled by Thomson Reuters forecast claims would fall slightly.

High unemployment is considered the biggest hurdle to a stronger recovery because people worried about jobs have scaled back their spending. Consumer spending accounts for the bulk of the country’s economic activity.

In early morning trading, the Dow Jones industrial average fell 29.02, or 0.3 percent, to 10,386.52. The Standard & Poor’s 500 index fell 3.94, or 0.4 percent, to 1,090.22, while the Nasdaq composite index fell 4.87, or 0.2 percent, to 2,210.83.