IBM International Business Machines Corp

By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch

Jobless claims miss expectations; L Brands, FitBit, SeaWorld, Tesla, Merck tumble on weak earnings

The Dow industrials and S&P 500 finished little changed on Thursday, and the Nasdaq Composite booked its 10th loss in 11 sessions ahead of a key report on employment due Friday.

Weak economic data, disappointing earnings and skittishness ahead of the closely watched employment report combined to weigh on investor sentiment.

The S&P 500 index slipped less than 0.1% to close at 2,050.63, falling for the third straight session, with six of its 10 sectors ending lower, led by a 0.6% drop in consumer-discretionary shares. Energy caught a 0.7% lift from a rally in crude prices , sparked by concerns about output cuts amid a raging fire in oil-rich Alberta (http://www.marketwatch.com/story/oil-prices-rise-as-canadian-wildfire-threatens-output-2016-05-05). But those early gains faded somewhat.

The Dow Jones Industrial Average advanced 9 points, or less than 0.1%, to close at 17,660.71, barely snapping a two-day losing streak, led by a 1.5% rise in shares of International Business Machines Corp.(IBM).

The blue-chip gauge was pressured by a 2% decline in Caterpillar Inc.(CAT), which was the target of a short-betting strategy by hedge-fund investor David Einhorn on Wednesday at the Ira Sohn Investment. Another blue-chip, Merck & Co. Inc (http://www.marketwatch.com/story/merck-beats-profit-expectations-bumps-up-full-year-guidance-range-2016-05-05).(MRK), declined 1.3% after weak results.

Meanwhile, the Nasdaq Composite shed nearly 9 points, or 0.2%, to finish at 4,717.09.

See also: How a raging inferno in Alberta is hobbling oil production (http://www.marketwatch.com/story/how-a-raging-inferno-in-alberta-is-hobbling-oil-production-2016-05-05)

Stocks lost momentum in the middle of the session as the oil rally lost steam. Lackluster data on the U.S. labor market and a strong dollar also deflated risk appetite.

Ahead of the jobs report set to be released at 8:30 Eastern Time tomorrow, investors tend to be hesitant to commit to big bets. Caution hasn't been in short supply as a recent batch of economic reports paint a picture of U.S. economy that is slowing.

On Thursday, data showed the number of Americans who applied for unemployment benefits (http://www.marketwatch.com/story/us-jobless-claims-climb-17000-to-274000-2016-05-05) at the end of April rose to a five-week high, missing economists' expectations.

The jobless-claims data came one day after a weaker-than-expected report on private-sector payrolls and a decline in worker productivity, which pushed stocks to finish lower on Wednesday (http://www.marketwatch.com/story/us-stock-futures-mired-in-red-with-private--payrolls-data-on-tap-2016-05-04).

"We're in this stall-speed market, where sentiment can only take us so far before the data smack us in the face," said Mike Antonelli, equity sales trader at R.W Baird & Co.

According to Antonelli, investors were getting worried by the dollar's (http://www.marketwatch.com/story/dollar-set-to-gain-against-euro-yen-for-a-3rd-day-2016-05-05) three-day sharp advance and were reluctant to buy stocks ahead of Friday's labor report. The ICE U.S. Dollar Index was up 0.6% Thursday afternoon in New York and on track to post a 0.7% weekly gain.

Still, the fact that the main benchmarks are trading in a narrow range could suggest that evidence of weakness in the jobs market is viewed as justification for the Federal Reserve further delaying interest-rate hikes this year, particularly since inflation remains subdued (http://www.marketwatch.com/story/heres-why-inflation-might-be-this-markets-bogeyman-2016-05-05), said Jeff Carbone, managing director at wealth manager Cornerstone Financial Partners.

Meanwhile, analysts were watching key technical indicators that were flashing warning signals. Most notably that the S&P is now noticeably below its 20-day moving average. Wednesday, the large-cap benchmark fell more than 3% below its recent highs, a drop that last occurred in November.

The slow, yet consistent selloff over the past two weeks has kept the S&P 500 confined to a "clear downward sloping channel," said Frank Cappelleri, technical analyst at Instinet.

"While not a crash by any means, the recent action has altered the market's complexion," Cappelleri said. "This was inevitable, of course. Now the market must prove it can take a punch, which could prove challenging."

Data and Fed speakers: Fed officials maintained a slightly more hawkish tone, which first re-emerged in remarks late last week.

San Francisco Fed President John Williams said Thursday two or three interest rate increases this year is "reasonable," but the U.S. central bank will continue to watch economic data, during an interview with CNBC. (http://www.cnbc.com/2016/05/05/feds-williams-all-the-data-pointing-to-the-right-direction-in-the-labor-market.html)

St. Louis Fed President James Bullard said weak economic growth caused him to moderate his support for a rate hike at the Fed's April meeting. He stressed that all options are on the table for the Fed's upcoming meeting in June (http://www.marketwatch.com/story/feds-bullard-says-weak-growth-led-him-to-dial-back-support-of-april-rate-hike-2016-05-05).

However, Atlanta Fed President Dennis Lockhart said he's "on the fence" about raising interest rates at the Fed's next meeting in June. He made his comments during an interview on CNBC Thursday afternoon.

Williams and Bullard are expected to appear on a panel on "international monetary policy and reform in practice" at the Hoover Institute conference in Stanford University at 7:15 p.m. Eastern Thursday.

Stocks to watch:Tesla (http://blogs.marketwatch.com/thetell/2016/05/04/tesla-results-to-include-model-x-sales-model-3-prep-live-blog/)(TSLA) fell 5% despite the fact that the electric-car maker posted a narrower-than-expected first-quarter adjusted loss and sales that were in line with Wall Street's forecasts late Wednesday.

Read:Elon Musk promises Tesla will do the improbable (or even impossible) (http://www.marketwatch.com/story/elon-musk-promises-tesla-will-do-the-improbable-or-even-impossible-2016-05-04)

Alibaba Group Holding Ltd (http://www.marketwatch.com/story/alibabas-stock-surges-as-sales-beat-offsets-profit-miss-2016-05-05).(BABA) gained 4% after strong results.

L Brands Inc. (LB) plunged 12% after the retailer reported fiscal first-quarter sales that missed expectations.

And Fitbit Inc (http://www.marketwatch.com/story/fitbit-shares-plunge-on-weak-quarterly-outlook-2016-05-04).(FIT) tumbled 19% on a weak quarterly outlook.

Avon Products Inc.(AVP) fell 2.6% after reporting that its loss worsened in the most recent quarter (http://www.marketwatch.com/story/avon-loss-widens-on-dollar-and-restructuring-costs-2016-05-05).

SeaWorld Entertainment Inc.(SEAS) fell 5% after the company, which recently said it would abandon breeding its signature killer whales, announced Thursday that a measure of profit for the year would land below analysts' expectations (http://www.marketwatch.com/story/seaworld-shares-drop-on-soft-outlook-2016-05-05).

Kellogg Co. (K) fell 2.6% after the food company said sales fell short of estimates (http://www.marketwatch.com/story/kellogg-reports-quarterly-sales-decline-largely-due-to-venezuela-business-2016-05-05).

Whole Foods Market Inc (http://www.marketwatch.com/story/whole-foods-market-cuts-annual-guidance-2016-05-04-17485469).(WFM) gained 6% after the company cut its annual guidance, though profit slight beat Wall Street forecasts. Kraft Heinz Co (http://www.marketwatch.com/story/kraft-heinz-rallies-as-first-quarter-earnings-beat-expectations-2016-05-04).(KHC) rose 3.7% after better-than-expected earnings.

After the close, Square Inc.(SQ), GoPro Inc.(GPRO), FireEye Inc.(FEYE), News Corp(NWS.AU), which owns MarketWatch, the publisher of this report, Yelp Inc.(YELP), DreamWorks Animation SKG Inc.(DWA) and Herbalife Ltd.(HLF) will report.

AT&T Inc.(T) unwound a 15-year partnership with Yahoo Inc.(YHOO) and awarded the contract to Web and mobile portals to Synacor Inc.(SYNC).

Alphabet Inc.'s(GOOGL) YouTube will be offering a paid subscription bundle of streaming TV channels as soon as next year, Bloomberg News reported on Wednesday (http://www.marketwatch.com/story/youtube-reportedly-planning-streaming-tv-service-2016-05-04).

Other markets:Asian markets (http://www.marketwatch.com/story/asian-stocks-stymied-by-weak-china-services-data-2016-05-05) had a mostly lackluster session, with appetite for equities dampened by news that China's service activity grew at a slower pace in April. Fears over slowing economic growth world-wide has been a factor in driving down global equity prices this week.

European stocks (http://www.marketwatch.com/story/european-stocks-break-four-day-losing-run-as-oil-prices-rally-2016-05-05) snapped a four-day losing streak, led by gains for major oil producers.

Gold prices (http://www.marketwatch.com/story/gold-books-loss-ahead-of-friday-jobs-report-looms-2016-05-05) logged a loss, weighed by a rebound in the U.S. dollar.

(END) Dow Jones Newswires

May 05, 2016 17:24 ET (21:24 GMT)

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