Stocks fell on Thursday after three days of gains, following weaker-than-expected data on the labor market, though some recent earnings reports helped limit the retreat.
The benchmark S&P 500 index has risen 2.3 percent over the past three days, ending Wednesday just 0.33 percent shy of the year's closing high. Those gains came on better-than-expected results from such companies as Johnson & Johnson and Goldman Sachs .
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Weekly jobless claims rose much more than expected in the latest week to 388,000, from a revised 342,000 in the previous week. Analysts had expected claims to rise to 365,000, though a Labor Department official said it appeared state-level administrative issues were distorting the data.
"This is giving investors a reason to take profits after a nice little run, but I think we'll go back to focusing on earnings soon, and we're starting to see buyers come back into the market already," said Doug DePietro, head of trading at Evercore Partners in New York.
Morgan Stanley fell 1.2 percent to $18.24 after reporting a net loss, hurt by an accounting charge. On an adjusted basis, earnings beat expectations, and shares had been higher in premarket trading.
"There's stuff for both bulls and bears in Morgan Stanley," DePietro said. "Nothing too bad, but very mixed."
A pair of Dow components rallied after reporting results and were the two biggest gainers on the blue chip index. Verizon Communications Inc had revenue that was slightly above expectations while Travelers Cos posted operating earnings that were much stronger than expected.
The Federal Reserve Bank of Philadelphia said its index of business conditions in the U.S. Mid-Atlantic region rose more than expected in October, climbing to 5.7 from -1.9 in September. Analysts were looking for a read of 1.0.
The Dow Jones industrial average was down 17.71 points, or 0.13 percent, at 13,539.29. The Standard & Poor's 500 Index was down 3.34 points, or 0.23 percent, at 1,457.57. The Nasdaq Composite Index was down 11.32 points, or 0.36 percent, at 3,092.80.
Although it's still early in the earnings season, results have been a bit better than anticipated. With 16 percent of S&P 500 companies having reported, 65 percent have beaten analysts' expectations, ahead of the long-term average of 62 percent.
Still, earnings are expected to drop 1.7 percent from a year ago, according to Thomson Reuters data, a little better than a forecast for a drop of 2.3 percent earlier in the week.
While U.S. company earnings have been the primary driver over the past two weeks, market participants continue to watch Europe for how it plans to deal with debt in Spain and Greece.
EU leaders meet Thursday at a summit where they will try to bridge differences over plans for a banking union, seen as the first stage in a long-term strategy to overhaul the monetary union.
Still, no substantial decisions are expected, keeping investors cautious over how the region will tackle its three-year-old debt crisis. European shares <.FTEU3> were down 0.2 percent.
In China, the country's GDP growth rate in the third quarter suggested it may have hit the floor of a seven-quarter-long downturn.
(Editing by Bernadette Baum)