Stocks mixed even as claims for unemployment benefits fall more than expected

Stocks mixed as caution about recovery remains

NEW YORK — Major stock indexes are mixed as a drop in new claims for unemployment benefits wasn’t enough to resolve worries about the economy.

Analysts say that while a better-than-expected drop in claims for unemployment benefits was helpful, it still doesn’t signal the economy is strong. That has kept the market in check Thursday.

The Labor Department says first-time claims for unemployment benefits dropped to 473,000 last week, after jumping above 500,000 for the first time since November a week earlier.

In midday trading, the Dow Jones industrial average is down 16, or 0.2 percent, at 10,044. The S&P 500 is down less than a point at 1,055, while the Nasdaq composite is down 5, or 0.3 percent, at 2,136.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) — Major stock indexes turned mixed Thursday as a drop in new claims for unemployment benefits wasn’t enough to resolve worries about the economy.

The Dow Jones industrial average fell 7 points in late morning trading after getting an early 45-point lift from the weekly unemployment report. Broader indexes also traded in a narrow range.

“It really doesn’t change the trend,” Peter Cardillo, chief market economist at Avalon Partners Inc. said of the report, which showed that initial claims for unemployment benefits fell more than expected last week. The economy is still sputtering, so investors are cautious, particularly ahead of Federal Reserve chairman Ben Bernanke’s speech Friday.

Cardillo said investors are anxious to see if Bernanke gives any indication about the pace of recovery or indicates the Fed is worried that the U.S. might slip back into recession.

Investors want to “see if the pulse of the Fed is beating at a fast rate with anxiety over the economy,” Cardillo said.

The Labor Department said first-time claims for unemployment benefits dropped to 473,000 last week, after jumping above 500,000 for the first time since November a week earlier. Economists were expecting a more modest drop to 490,000, according to Thomson Reuters.

“On the positive side, claims came down slightly compared to the shock last week,” said Oliver Pursche, executive vice president at Gary Goldberg Financial Services. “That said, the number still remains stubbornly high.”

The latest jobless claims report suggests that hiring remains weak. In a healthy economy, weekly claims usually fall below 400,000. At the height of the recession in March 2009, weekly claims peaked at 651,000.

Investors are still worried about a persistently high unemployment rate of 9.5 percent and a general reluctance of employers to hire workers.

On the positive side, this week’s report marked the first decline after three straight weekly gains.

High unemployment remains the biggest obstacle to a stronger recovery because people worried about their jobs have cut back on spending. Companies have been slow to hire because of uncertainty surrounding tax, financial regulation and health care reform costs as well as worries about consumer demand.

In late morning trading, the Dow fell 6.74, or 0.1 percent, to 10,053.47. The Standard & Poor’s 500 index rose 0.22, or less than 0.1 percent, to 1,055.55, while the Nasdaq composite index fell 2.63, or 0.1 percent, to 2,138.91.