NEW YORK (AP) _ Stocks pulled back Thursday as investors juggled a drop in weekly unemployment claims and stronger-than-expected results from Ford Motor Co. with weak housing figures and cautious comments from some retailers.
Selling intensified early in the session after the government reported that sales of new homes fell last month to the lowest level since 1991. While the decline had been expected, it appeared to stir concerns that the hangover from the housing bubble would remain an intractable obstacle for the economy.
The retreat wasn't surprising as investors tried to square their concerns about forecasts from Amazon.com Inc. and Starbucks Corp. with the drop in weekly unemployment claims and the results from Ford.
Wall Street is collating the rush of quarterly profit and loss reports as well as the fresh economic data to help determine how long the economy's slowdown might last. Some of the companies' forecasts underscored a worrisome notion that the economy might enter a prolonged period of sluggishness, while others signaled for some investors that Wall Street has been overly dour in its assessment of the business climate.
The Labor Department's report that claims for unemployment benefits declined by 33,000 last week to 342,000 came as a surprise after economists predicted claims would rise by 3,000. The notion that unemployment might be contained appeared to cap some concern about the economy. With consumer spending accounting for about 70 percent of U.S. economic activity, a rise in unemployment could dent people's willingness to reach into their wallets.
In midmorning trading, the Dow Jones industrial average fell 26.63, or 0.21 percent, to 12,736.59.
Broader stock indicators declined. The Standard & Poor's 500 index fell 6.54, or 0.47 percent, to 1,373.39, and the Nasdaq composite index fell 19.36, or 0.80 percent, to 2,385.85.
Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 221.7 million shares.
Bond prices fell following the drop in unemployment claims. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.81 percent from 3.74 percent late Wednesday.
The dollar rose against most other major currencies, while gold prices fell.
Light, sweet crude fell $1.61 to $116.69 on the New York Mercantile Exchange.
While investors appeared pleased by the employment report not all the day's economic news was welcome. The Commerce Department said that new home sales fell by 8.5 percent in March to a seasonally adjusted annual rate of 526,000 units _ the slowest pace since October 1991. Also, the median price of a new home showed the sharpest year-over-year decline in nearly four decades.
Adding to investors' list of worries, orders to factories for durable goods _ big-ticket items like refrigerators, cars and computers _ declined for a third straight month in March. This marks the longest sustained pullback since the 2001 recession.
And investors also appeared concerned by comments from Amazon and Starbucks. Amazon worried investors over the strength of its profit margins, while Starbucks warned that its second-quarter profit will likely fall short of Wall Street's expectations because of weak consumer spending.
Their forecasts, delivered after the closing bell Wednesday, touched off unease over the prospects for the consumer. Amazon fell $3.14, or 3.9 percent, to $77.86, while Starbucks dropped $1.91, or 11 percent, to $15.94.
In other corporate news, Ford Motor Co. reported a $100 million profit in the first quarter after strong results from Europe and South America helped make up for a slower U.S. economy. It was the first profitable quarter for the No. 2 U.S.-based automaker since the second quarter of 2007. Ford rose 68 cents, or 9 percent, to $8.20.
3M Co. _ the maker of Scotch tape and Post-It notes _ fell $2.22, or 2.8 percent, to $78.41 after reporting its first-quarter profit fell 28 percent from a year earlier, which benefited from a gain on the sale of one of its branded pharmaceutical business in Europe.
Motorola Inc. slid 43 cents, or 4.5 percent, to $9.12 after reporting that its first-quarter loss widened following a 39 percent decline in its mobile business.
The Russell 2000 index of smaller companies fell 6.19, or 0.87 percent, to 701.92.
Overseas, Japan's Nikkei stock average fell 0.28 percent. In afternoon trading, Britain's FTSE 100 fell 1.41 percent, Germany's DAX index slipped 0.16 percent, and France's CAC-40 fell 0.76 percent.
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Copyright 2008 The Associated Press.