NEW YORK (AP) - Wall Street turned lower Thursday after a report on jobless claims gave mixed messages about the state of the economy.
Stocks rose early on, but a decline in financial shares pushed the market lower in early afternoon trading.
Another increase in people receiving jobless benefits dented the market’s recent burst of confidence, which has driven the Dow Jones industrial average up 14 percent over the past seven days.
Investors had initially cheered another part of the employment report, which showed the number of new initial claims for jobless benefits decreasing last week.
In midday trading, the Dow Jones industrial average fell 88.57, or 1.2 percent, to 7,398.01.
The broader Standard & Poor’s 500 index fell 8.76, or 1.1 percent, to 785.59, while Nasdaq composite index fell 9.00, or 0.6 percent, to 1,482.22.
The number of initial requests for unemployment insurance last week dropped to a seasonally adjusted 646,000 from the previous week’s revised figure of 658,000, which exceeded economists’ estimates. But the number of people continuing to receive benefits set a new record for the eighth straight week, jumping 185,000 to a seasonally adjusted 5.47 million.
Analysts saw Thursday’s decline as a slight pause to the enthusiastic buying that has marked the advance that began last week.
The S&P 500 index has jumped 17 percent over the past seven days, a remarkable feat considering that only a few weeks ago the market was trading at levels not seen in more than a decade.
“We’ve had a lot of very positive news that I believe has caught a lot of people by surprise,” said Kent Engelke, managing director at Capital Securities Management in Glen Allen, Va.
Stock and bonds both surged on Wednesday following news that the Federal Reserve would pump more than $1 trillion into the economy by buying Treasury bonds and increasing its purchases of mortgage-backed debt securities.
The intended effect of the actions is to break a logjam in lending and lower interest rates, making it less expensive for consumers to borrow for everything from homes to cars to credit cards.
But analysts said some of Thursday’s decline could be attributed to investors assessing just how effective the moves will be.
“Yesterday was viewed as a positive,” said Todd Salamone, senior vice president of research at Schaeffer’s Investment Research. “But there was still some debate as to whether the move was bold enough and what the implications are down the road, the unintended consequences. That debate could be causing some hesitation.”
One of those possible consequences is the potential for runaway inflation, Salamone said.
On Thursday, mortgage finance giant Freddie Mac said average rates on 30-year fixed-rate mortgages dropped to 4.98 percent this week _ the lowest level since January. Rates are poised to continue falling.
In corporate news Thursday, FedEx Corp. said it plans to cut more jobs and trim wages again, as the company reported its fiscal third-quarter profit tumbled 75 percent. The shipping company is often seen as a bellwether for the economy. Shares jumped $3, or 7 percent, to $46.05.
Citigroup Inc. announced plans to increase the number of its common shares outstanding and execute a reverse stock split. News that the bank had been profitable in the first two months of the year sparked the market rally that began last week. Citigroup shares fell 39 cents, or 13 percent, to $2.69, while JPMorgan Chase & Co. fell $1.83, or 6.8 percent, to $25.28.
The Russell 2000 index that tracks small company stocks fell 2.43, or 0.6 percent, to 415.20.
Advancing issues outnumbered decliners by 8 to 7 on the New York Stock Exchange were volume came to 879.1 million shares.
Bond prices mostly fell, a day after steep gains because of news from the Fed.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.52 percent from 2.50 percent late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.21 percent, from 0.20 percent late Wednesday.
The dollar mostly fell against other major currencies, while gold prices soared.
Oil prices jumped $2.92 to $51.06 a barrel on the New York Mercantile Exchange.
Overseas, Japan’s Nikkei stock average fell 0.3 percent. In afternoon trading, Britain’s FTSE 100 was rose 0.2 percent, Germany’s DAX index gained 0.9 percent, and France’s CAC-40 rose 0.5 percent.
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