NEW YORK – Stocks fell slightly Thursday as investors digested a report showing a larger-than-expected rise in unemployment benefit claims and a drop in crude oil prices.
The Dow Jones industrial average (search) dropped 8.41 points, or 0.08 percent, to 10,173.33. The Standard & Poor's 500 Index (search) rose 0.13 points, or 0.01 percent, to 1,105.09. The technology-laced Nasdaq Composite Index (search) fell 7.80 points, or 0.42 percent, to 1,852.92.
Late summer trading is known for being thin, but with the Republican National Convention set for New York next week, Wall Street is even less crowded than usual for late August.
"On and off, stocks have really barely moved on the day. We've seen crude down on the day and then approach unchanged on the day and that has really been the action," said David Hegarty, head of equity trading for Commerzbank Securities.
Merck & Co. (MRK) weighed on the market after a large study financed by the Food and Drug Administration said patients taking Merck's Vioxx (search) arthritis drug had a 50 percent greater chance of heart attacks and sudden cardiac death than individuals using Pfizer Inc.'s rival Celebrex medicine.
Starbucks (SBUX), the world's largest coffures eased for the fifth-straight session amid increased Iraq exports, higher-than-expected U.S. gasoline stocks and sustained technical selling. Doughnut shop chain Krispy Kreme Doughnuts Inc. (KKD) was also in focus after it reported sharply lower quarterly earnings, missing Wall Street expectations.
"We're really winding down the summer and the market is just trading off every tick in the oil market right now," said Robert Mikkelsen, managing director of institutional sales and trading at The Advest Group Inc. "We're at the climax of the summer doldrums."
Crude oil prices continued to retreat from highs of near $50 per barrel reached last week. On Thursday, the Organization of Petroleum Exporting Countries indicated it would discuss ways to push prices down faster, perhaps through increased production, at its meeting next month. Light crude for October delivery settled 37 cents lower at $43.10 a barrel on the New York Mercantile Exchange (search).
The ranks of Americans filing for initial unemployment compensation swelled last week, the Labor Department (search) said, but at least half of the increase was linked to devastation wrought by Hurricane Charley earlier this month. Initial jobless claims rose by a larger-than-expected 10,000 to 343,000 in the week ended Aug. 21 from an upwardly revised 333,000 the prior week.
"The jobless claims will take the air out of the bull's tires in this stock market. Economic reports this week all week have indicated that the economy still remains in a soft patch. ... The one bright star in the landscape is that crude oil prices are under $43 a barrel," said John Person, head financial analyst with Infinity Brokerage Services.
Investors said important economic figures would arrive on Friday, with the release of gross domestic product numbers. In addition, a keynote speech by Federal Reserve Chairman Alan Greenspan (search ) Friday at a retreat for central bankers, will be closely watched for indications of the Fed's intentions about interest rates.
GDP is likely to show the U.S. economy grew even less than the 3 percent previously estimated for last quarter due largely to consumers' appetite for foreign goods.
Starbucks weighed on the Nasdaq and the S&P after it reported late on Wednesday its slowest growth in 14 months at stores open at least a year. Starbucks fell $2.97, or 6.45 percent, to $43.07.
Krispy Kreme sank 10 percent, or $1.59, to $13.77, after its earnings missed expectations by a wide margin. The company said it expects slower sales for the remainder of the year, and cut the number of new stores it plans to open next year.
Brown-Forman Corp. (BFB), the maker of Jack Daniel's and Finlandia vodka, gained 38 cents to $46.75 after its quarterly earnings beat expectations on robust growth in its liquor business, offsetting weaker sales in its Lenox china division.
Advanced Micro Devices Corp. (AMD) slumped 3.1 percent, or 38 cents, to $11.82, after Banc of America cut it to "neutral" from "buy," saying the chip cycle had come and gone prematurely, leaving companies in the industry with excess inventory. The brokerage maintained its rating, but cut its price targets for several other companies, including Broadcom Corp., which lost 58 cents to $29.23, and Micron Technology Inc. (MU), which fell 20 cents to $11.83.
Merck & Co. (MRK) shed 2.1 percent, or 97 cents, to $45.05, after health maintenance organization Kaiser Permanente said it was reconsidering its use of the arthritis drug Vioxx because a major study found it could increase the risk of heart problems.
Hog and pork producer Smithfield (SFD)'s shares were up 12 cents or 0.5 percent at $25.20 after its first-quarter earnings more than doubled from the year-ago period, boosted by higher sales.
The Russell 2000 index, which tracks smaller company stocks, was down 2.89, or 0.5 percent, at 547.25.
Overseas, Japan's Nikkei stock average finished 0.1 percent lower Thursday. In Europe, France's CAC-40 and Britain's FTSE 100 each added 1 percent and Germany's DAX index rose 1.2 percent.
Reuters and the Associated Press contributed to this report.