U.S. stocks closed little changed Thursday, with investors unwilling to place large bets ahead of Friday's employment report, as corporate earnings and thoughts of accelerated tapering by the Federal Reserve were also in view.
"The markets are still a little worried, but eventually there will be a shift in focus from taper, taper, taper to earnings," said Chris Gaffney, senior market strategist at EverBank
Improvements in the labor market have been cited as central to Fed policy decisions, with minutes from the central bank's December meeting released Wednesday afternoon included some members expressing the view that the "criterion of substantial improvement in the outlook for the labor market was likely to be met in the coming year."
"Investors are looking for direction from the Fed, and the minutes pretty much confirmed that the taper is going to continue, and in fact put the chances of a faster taper in play," said Gaffney of minutes from the meeting at which central bankers decided to start cutting the Fed's monthly asset purchases.
The Dow Jones Industrial Average erased most of the day's losses, finishing down 17.98 points, or 0.1 percent, at 16,444.76.
The S&P 500 was little changed, gaining less than 1 point to end at 1,838.13, with telecommunications and energy the leading laggards and health care and utilities performing best of its 10 sectors.
The Nasdaq remained in the red, losing 9.42 points, or 0.2 percent, to 4,156.19.
Alcoa shares fell. The U.S. Securities and Exchange Commission on Thursday said it had charged the aluminum producer with violating the Foreign Corrupt Practices Act, saying its "subsidiaries repeatedly paid bribes to government officials in Bahrain."
Alcoa, which reports quarterly results after Thursday's close, agreed to pay $384 million to settle the SEC charges and a separate case announced by the U.S. Department of Justice.
For every seven shares falling, eight gained on the New York Stock Exchange, where nearly 697 million shares traded. Composite volume topped 3.6 billion.
The dollar edged lower against the currencies of major U.S. trading partners and the yield on the 10-year Treasury note fell 3 basis points to 2.964 percent.
A much stronger-than-expected employment report would likely take the 10-year yield "above 3.034 percent, the recent high, and stocks will be put to the test," emailed Elliot Spar, market strategist at Stifel, Nicolaus & Co.
"There are still worries if interest rates jump up dramatically that could impact the housing market and consumer spending could get hit. If you revert to the mean, 5 percent is a more normalized level for the 10-year; that's not going to happen overnight, I could see it going to 3.5 percent and perhaps even higher before the end of the year, and the market could adjust to that," said Gaffney at EverBank.
Data Thursday had applications for unemployment benefits falling by 15,000 to 330,000 last week, below estimates of 340,000.
"It's an improvement from last week, and better than surveys expected, so it's positive, but we'll need to see continued improvement," said Gaffney.
Separately, a report released Thursday from consultants Challenger, Gray & Christmas showed the number of planned layoffs at U.S. firms fell by 32 percent in December to a more-than 13-year low.
The Labor Department on Friday releases December numbers for new hiring and the jobless rate.
In a speech delivered Thursday afternoon, Kansas City Federal Reserve Bank President Esther George called the decision to taper a small but positive first step toward a normal interest-rate environment, but also said the ongoing purchase of assets remains a cause for concern. George has long opposed the Fed's easing policy.
On Wednesday, stocks ended mixed after minutes from the Fed's last policy meeting had central bankers viewing the benefits of stimulus as diminishing over time, while an ADP report on payrolls was better than expected.
—By CNBC's Kate Gibson
Coming Up This Week:
Thursday: Minneapolis Fed President Narayana Kocherlakota talks about the economy at 8 p.m. Eastern. Companies expected to report quarterly results include Alcoa, PriceSmart and Texas Industries.
Friday: Nonfarm payrolls at 8:30 a.m. Eastern. Wholesale inventories for November at 10 a.m. Eastern.
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