Stocks dip ahead of news on jobs

NEW YORK - Stocks edged lower Thursday as uncertainty built up ahead of a key labor-market report.

The Dow Jones industrial average came within two points of 11,000 before turning lower for most of the day.

Slightly better news on claims for unemployment insurance gave stocks an early lift, but the gains faded quickly as traders opted for caution ahead of Friday's employment report from the Labor Department, the most crucial piece of news on the economic calendar.

First-time claims for unemployment insurance fell last week, a better result than analysts had been expecting. Retailers including Macy's Inc., Abercrombie & Fitch Co., and Limited Brands Inc. reported better-than-expected monthly sales, which initially provided a lift to the market.

The retail-sales news was positive, but "there's not enough to move the needle given that we've got the big jobs report" Friday, said Hank Smith, chief investment officer at Haverford Investments.

The Dow Jones industrial average fell 19.07, or 0.17 percent, to close at 10,948.58. The Standard & Poor's 500 index fell 1.91, or 0.16 percent, to 1,158.06, while the Nasdaq composite rose 3.01, or 0.13 percent, to 2,383.67.

Claims for unemployment insurance have been falling steadily in recent weeks, but they still indicate that employers are not ramping up hiring. Payroll company ADP said Wednesday that private employers trimmed jobs in September for the first time in seven months.

Earnings reporting season got under way for U.S. companies after the market closed Thursday when aluminum-maker Alcoa Inc. became the first company that is part of the Dow Jones industrial average to report quarterly results. Alcoa's net income fell 21 percent because of lower metals prices, but the results still beat analysts' expectations.

PepsiCo Inc. reported mixed results earlier in the day. The maker of drinks and snacks said its third-quarter profit jumped in part on revenue gains after its acquisition of its two largest bottlers this year. Earnings matched expectations, but the company narrowed its earnings outlook to a level below analysts' forecasts.

PepsiCo shares fell $2.01, or 2.95 percent, to $66.10. Shares of Limited Brands rose $1.05, or 3.81 percent, to $28.64, while Abercrombie & Fitch shares jumped $3.44, or 8.91 percent, to $42.03. Macy's rose 15 cents to close at $23.85.

Bond yields remained near their lowest levels since January 2009 as traders expect the Federal Reserve to step up its purchases of Treasurys in order to lower interest rates and encourage borrowing.

Mortgage buyer Freddie Mac said rates on traditional 30-year fixed-rate mortgages reached their lowest level on records dating to 1971.

The dollar continued to fall against other major currencies as traders expect U.S. interest rates to fall further. Currencies of nations with higher interest rates become more attractive to foreign exchange traders when U.S. rates fall.

Gold, which is considered a safe alternative to the dollar, hit another record of $1,366.00 an ounce early Thursday before pulling back to $1,335.00 an ounce.