Stocks finished narrowly mixed in a quiet session Thursday as investors took a breather following a sharp rally in the previous session and ahead of the crucial government non-farm payroll figure due Friday morning.
The Dow Jones Industrial Average slipped 25.65 points, or 0.21 percent, to close at 12,020.03, snapping a three-day winning streak. The blue-chip index is still in the black for 2011 and is on pace for its biggest weekly percentage gain since July 2009.
Alcoa and Travelers led the Dow laggards, while Boeing gained.
The S&P 500 shaved 2.37 points, or 0.19 percent, to finish at 1,244.59. The Nasdaq eked out 5.86 points, or 0.22 percent, to end at 2,626.20.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, was finished below 28.
Among key S&P sectors, financials ended lower, while techs logged small gains.
Financials eased off their worst levels but still finished modestly lower after Massachusetts attorney general filed a lawsuit against five major banks including BofA, Wells Fargo , JPMorgan and Citigroup , accusing them of deceptive foreclosure practices, such as robo-signing. (Watch: Will Bank Stocks Bounce?)
The number of weekly jobless claims jumped unexpectedly last week to a seasonally adjusted 402,000, according to the Labor Department, edging above 400,000 for the first time in over a month.
The jobless claims news comes ahead of an important government employment report on Friday. The monthly nonfarm payroll is expected to show a gain of 122,000 in November and a rise in private payrolls of 140,000. (Read More:November Jobs Report Could Hold Positive Surprise)
“We seem to be taking a bit of a pause to catch our breath ahead of the big jobs number,” said Ryan Detrick, senior technical strategist with Schaeffer's Investment Research. “All in all, it’s been two steps forward, one step back on the jobs front…but for tomorrow’s employment data, we would be in the better-than-expected camp as we see that things have been improving across the board.”
Detrick noted that December is known to be one of the strongest months for equities and should historical trends hold, investors should anticipate a rally in the next few weeks.
“If we get more positive [economic] news and nothing particularly negative from Europe, the potential for a December rally is very real…there’s still a lot of money on the sidelines,” he explained, adding that the rally could boost the S&P near 1,350 by the first quarter of 2012.
Among automakers, General Motors , Ford and Toyota all posted sales that gained in November. But shares of all three firms closed slightly lower.
Among retailers, Target slipped after the big-box retailer reported lower-than-expectedNovember retail sales.
Meanwhile, Macy's, Costco Wholesale, Limited Brands, and teen retailer Buckle all topped Wall Street's estimates thanks to robust Black Friday sales.
Among earnings, Lululemon Athletica slumped after the yoga apparel retailer said same-store sales declinedand added it saw no substantial pickup in the current quarter.
Barnes & Noble plunged more than 15 percent after the bookstore chain swung to a quarterly loss.
Meanwhile, Kroger squeezed out a gain after the supermarket chain boosted its 2011 earnings forecast, thanks to strong same-store sales.
H&R Block is scheduled to post earnings after-the-bell tonight.
Yahoo rallied after news a consortium including Blackstone, Bain, Alibaba and Softbank have started formal discussions about a bid for the search-engine company for about $25 billion.
Meanwhile, Sprint said it plans to pay up to $1.6 billion to Clearwire over the next four years, easing worries over a liquidity crisisfor the Internet service provider. Clearwire shares soared almost 15 percent.
Also on the economic front, the pace of growth in the manufacturing sector rose in November to its strongest level since June, according to the Institute for Supply Management. However, the employment component of the report declined more than expected.
And construction spending jumped in October, according to the Commerce Department.
Meanwhile, China's factory sector declined in November for the first time in nearly three years, adding to global slowdown fears and underscoring the central bank's move to cut bank reserve requirements to shore up the economy.
In Europe, Spain's Treasury sold 3.75 billion euros ($5.05 billion) in bonds but yields jumped to the highest levels in 14 years.
German Chancellor Angela Merkel is expected to talk with French President Nicolas Sarkozy early next week on the euro zone crisis ahead of a widely-anticipated summit of EU leaders in Brussels on Dec. 9.
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