U.S. stocks were mixed Thursday, as investors were cautious a day before the monthly jobs report and shares of Merck & Co. (MRK) dropped after a legal setback.

The Dow Jones industrial average was down 23.05 points, or 0.21 percent, at 11,216.50. The Standard & Poor's 500 Index was down 2.52 points, or 0.19 percent, at 1,309.04. The Nasdaq Composite Index was up 1.42 points, or 0.06 percent, at 2,361.17.

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A strong payrolls report for March could raise concerns that the Federal Reserve will keep raising interest rates further and longer than some had initially thought.

Traders took mixed views on court papers that showed President Bush authorized a leak to the media of classified material about Iraq.

The Nasdaq edged higher to a fresh 5-year closing high, boosted by optimism about new software from Apple Computer Inc. (APPL) and a strong earnings report from retailer Bed Bath & Beyond Inc. (BBBY).

"People are expecting a strong employment number ... and I think they are being a little hesitant," said Tom McIntyre, president and chief portfolio manager of McIntyre, Freedman & Flynn.

Economists polled by Reuters expect the addition of 190,000 jobs to U.S. nonfarm payrolls in March, which is below the 243,000 added in February.

Thursday, an unexpected drop in weekly U.S. jobless claims also fanned worries that the Federal Reserve may raise interest rates longer than expected to keep inflation at bay.

Chicago Federal Reserve Bank President Michael Moskow said U.S. monetary policy-makers will respond if inflation expectations rise.

On the New York Stock Exchange, Merck shares fell 3.2 percent, or $1.15, to $34.84 a day after a jury in the drug maker's Vioxx trial found the company failed to warn of increased cardiovascular risk and ordered it to pay at least $4.5 million in damages. Merck, which was the biggest weight on the Dow industrials, faces thousands of lawsuits over Vioxx.

Trading was volatile Thursday as traders digested the news of court documents that showed President Bush authorized a leak of classified material about Iraq. But many traders took comfort from the fact that the court documents did not say Bush authorized the leak of Valerie Plame's identity as a CIA agent.

"The market is reassured that Bush didn't do anything wrong," said Adam Tracy, director of listed trading at Thomas Weisel Partners, a San Francisco investment bank.

Helping the Nasdaq were shares of Bed Bath & Beyond, which climbed 6.5 percent, or $2.50, to $40.82, a day after the home goods retailers' earnings beat expectations. After Wednesday's closing bell, the retailer also gave a full-year outlook above analysts' forecasts.

Apple shares rallied for a second straight day, gaining 6 percent, or $4.03, to $71.24, a day after the company released software that lets Mac computers run Microsoft's Windows operating system -- a move that could expand the number of Mac computer users.

The Dow's decline was limited by a rise in shares of 3M Co. (MMM) which jumped 5.1 percent, or $3.92, to $81.38, their biggest one-day gain in nearly 18 months after the diversified manufacturer raised its first-quarter outlook.

Utility shares fell as the yield on the benchmark 10-year U.S. Treasury note spiked to 4.905 percent. Utilities' stocks are generally owned for their dividend yields, which can look less attractive when bond yields rise.

Another worrisome factor for stock investors was the climb in U.S. crude oil futures prices, which settled near $68 a barrel. U.S. crude for May delivery rose 87 cents to settle at $67.94 a barrel, the highest close on the NYMEX since Jan. 30. High crude prices can raise corporate energy costs and curb consumer spending.

U.S. retailers reported lackluster March sales after the calendar shift for observing Easter crimped demand for spring merchandise. But big chains like Wal-Mart Stores Inc. and Target Corp. said the holiday should help April sales rebound.

Volume was moderate on the New York Stock Exchange, with about 1.57 billion shares changing hands, slightly below last year's daily average of 1.61 billion. On Nasdaq, about 2.20 billion shares traded, above last year's daily average of 1.80 billion.

Decliners outpaced advancers on the NYSE by a ratio of 4 to 3. On Nasdaq, about eight stocks fell for every seven that rose.

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