Stocks edge lower after jobs, retail data

NEW YORK — Stocks turned lower in early trading Thursday as disappointing reports on jobs and retail sales deflated some of investors’ optimism about the economy.

Investors sent the major indexes slightly higher at the opening, but stocks failed to hold on to the gains and extend Wednesday’s big rally, which followed upbeat comments from the Federal Reserve.

Falling retail sales put a damper on hopes the recession will end sooner rather than later. The Commerce Department said retail sales fell 0.1 percent in July, significantly worse than the 0.7 percent increase that was expected by economists polled by Thomson Reuters.

Results would have been even worse had it not been for a boost in auto sales thanks to the Cash for Clunkers autos trade-in program. Excluding autos, retail sales fell 0.6 percent, compared with expectations for a gain of 0.1 percent.

Retail sales are considered a strong indicator of economic recovery because consumer spending accounts for more than two-thirds of all economic activity.

A weekly report on unemployment also came in worse than projected.

The Labor Department said the number of newly laid-off workers filing claims for unemployment benefits rose unexpectedly to a seasonally adjusted 558,000, from 554,000 the previous week. Analysts were expecting new claims to drop to 545,000.

Despite the increase, initial claims remain below their peak levels above 600,000 where they have been for most of this year.

In early trading, the Dow Jones industrial average fell 50.26, or 0.5 percent, to 9,311.35. The Standard & Poor’s 500 index fell 4.57, or 0.5 percent, to 1,001.24, while the Nasdaq composite index fell 11.49, or 0.6 percent, to 1,987.23.