Stocks open higher after jobless claims report

Associated Press

Investors shuffled through the final day of trading before the government's July employment report.

The Dow Jones industrial average lost nearly 25 points and other major indexes suffered moderate slides Thursday as worries about the Labor Department's report dominated trading for a third day. A stream of disappointing July sales numbers from major retailers added to Wall Street's uneasy mood.

A recovery in the job market is crucial to the economy's ability to pull itself out of the longest recession since World War II. Unemployment often keeps rising after a recovery begins, but investors may need to see the pace of job losses slowing before they'll continue the rally that began in March.

Even with the worries about jobs, the market's slowdown this week isn't surprising. Analysts have been calling for a time-out because the Dow has surged 13.6% in just four weeks on hopes that the economy is strengthening.

Still, without some improvement in prospects for employment, investors are likely to get more of the disappointing reports that retailers delivered Thursday.

Many of the nation's biggest chains posted disappointing sales for July, as consumers spent gingerly because of worries about jobs.

"The consumer isn't dead, but he's injured," said Stephen Wood, chief market strategist at Russell Investments.

The weekly jobs figures and the retailers' reports have investors concerned that consumers don't feel confident enough to give the economy a strong recovery. Consumer spending accounts for more than two-thirds of U.S. economic activity.

On Thursday, the Dow fell 24.71, or 0.3%, to 9,256.26.

The Standard & Poor's 500 index dropped 5.64, or 0.6%, to 997.08, its first finish below 1,000 since Friday.

The Nasdaq composite index fell 19.89, or 1%, to 1,973.16.

About three stocks fell for every two that rose on the New York Stock Exchange, where consolidated volume came to 6.8 billion shares compared with 7.7 billion traded Wednesday.

Despite the growing caution in the market, analysts have been encouraged by the orderliness of the pullback, noting that stocks have shown strength in their ability to hold on to most of their gains rather than selling off sharply.

"We're not seeing panic selling," said Bill Groeneveld, president and head trader for VFinance Investments. "We always like to see some reassessment of where we're at."

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