By MADLEN READ, AP Business Writer 20 minutes ago
NEW YORK - Wall Street slipped modestly Thursday after the Labor Department reported a spike in jobless claims, sapping some of the market's confidence ahead of testimony from Federal Reserve Chairman Ben Bernanke and Friday's anxiously anticipated March employment report.
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Wall Street was disappointed to hear the government say the number of people applying for unemployment benefits rose by a full 38,000 last week to 407,000 — the highest level since September 2005. The less volatile four-week average of claims also increased, by 15,750 to 374,500.
However, the stock market's losses were mild, particularly given the huge advance Wall Street logged Tuesday and has mostly maintained. Investors got a bit of relief from the Institute for Supply Management which said Thursday the services sector contracted only slightly in March — a stronger performance than in February, and a better reading than many economists predicted.
Meanwhile, Wall Street was cautiously listening for new information about the economy and financial system from Federal Reserve Chairman Ben Bernanke, who was appearing before Congress for a second straight day. On Wednesday, the Fed chairman said a recession is possible in the first half of this year.
With a broad swath of corporate earnings reports set to arrive in the coming weeks, the market is eager for signs that the economy, while undeniably weak, is not crumbling, and that the credit markets are improving.
In mid-morning trading, the Dow Jones industrial average fell 43.96, or 0.35 percent, to 12,561.87.
Broader stock indicators also declined. The Standard & Poor's 500 index fell 4.44, or 0.32 percent, to 1,363.09, and the Nasdaq composite index fell 12.70, or 0.54 percent, to 2,348.70.
Government bonds edged higher as investors grew more uncertain about the economy and turned to safer assets. The yield on the 10-year Treasury note, which moves opposite its price, fell to 3.58 percent from 3.60 percent late Wednesday.
Crude oil fell 81 cents to $104.02 a barrel on the New York Mercantile Exchange, after surging a day earlier on the prospect of climbing demand for gasoline.
The dollar was mixed against other major currencies, while gold declined further below $900 an ounce.
The Russell 2000 index of smaller companies fell 0.78, or 0.11 percent, to 711.49.
Declining issues outnumbered advancers by about 5 to 4 on the New York Stock Exchange, where volume came to 212.2 million shares.
Tokyo's Nikkei index closed 1.52 percent higher. There were light losses in the European stock markets — London's FTSE fell 0.70 percent, Frankfurt's DAX lost 0.99 percent and Paris' CAC 40 slid 0.91 percent.
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