NEW YORK (TheStreet) -- Stocks were slightly lower on Thursday as markets pulled back from Wednesday's modest gains ahead of the kickoff of earnings season.
The S&P 500 was down 0.34%, the Dow Jones Industrial Average slid 0.21%, and the Nasdaq fell 0.7%.
Alcoa (AA) - Get Report unofficially kicks off earnings season on Thursday with third-quarter results after the closing bell. Expectations for corporate earnings are already low. Third-quarter earnings are expected to decline 4.2% from a year earlier, according to Thomson Reuters. Similar issues that plagued the second quarter such as a stronger U.S. dollar and lower energy prices are expected to carry over into this past quarter.
"We've seen companies set the bar rather low again for earnings season which has been typical," Chris Gaffney, president of EverBank World Markets, told TheStreet. "What we are looking for is to see what impact the stronger dollar has on U.S. companies. We are expecting and have seen some warnings from some of the multinationals that this strong dollar is hurting sales."
Jobless claims in the U.S. fell to their lowest level since mid-July, according to the Labor Department. The number of new claims for unemployment benefits fell 13,000 to 263,000 in the week ended Oct. 3. The less-volatile four-week claims average fell 3,000 to 267,500.
"While jobless claims are just one dimension of labor market activity, the trend in the series is encouraging and suggests the slowing in the September employment report may prove to be temporary," wrote Kevin Cummins, senior U.S. economist at RBS Securities, in a note.
U.S. stocks ended Wednesday modestly higher after energy and basic materials stocks jumped despite a drop in crude oil prices. Markets had moved erratically, however, in line with crude oil which rallied before slumping on an increase in domestic inventories.
European markets were narrowly mixed after German exports disappointed in August. Exports slumped 5.2%, their worst monthly performance since January 2009. Germany's trade surplus fell to 19.6 billion euro, below estimates of 20.2 billion euros. The Volkswagen (VLKAY) scandal will be factored into September data.
The Federal Reserve will release minutes from the September meeting of the Federal Open Market Committee. The central bank decided during the meeting to keep rates at crises levels, opting not to tighten monetary policy for the first time in a decade. However, reaction could be limited as investors have likely already priced in the likelihood of the first rate hike in 2016 after a weak jobs report for September.
Volkswagen shares were on watch as CEO of U.S. operations Michael Horn testified to the House Energy and Commerce subcommittee on the emissions scandal that has plagued the automaker since late September. Shares have fallen more than 30% since news broke that software was used in diesel cars to game emissions tests.
Dell and private-equity firmSilver Lake are reportedly in advanced talks to buy hardware company EMC (EMC) , according to The Wall Street Journal. The deal would be one of the biggest tech hardware industry takeovers in history. EMC shares were up 3.6%.
Deutsche Bank (DB) - Get Report shares were on watch after the bank said it would take a charge of 5.8 billion euros in the third quarter, tied to higher regulatory requirements in its corporate banking unit. The bank guided for a quarterly loss between 6 billion and 6.2 billion euros.
Lumber Liquidators (LL) - Get Report jumped 8.2% on news it will pay $10 million to settle federal charges. The company will plead guilty to five violations of environmental law which alleged it had knowingly sourced illegal wood products. However, management still has to deal with a separate investigation into the sale of harmful flooring products.
Domino's Pizza (DPZ) - Get Report fell more than 4% as quarterly sales and profit fell short of estimates because of the impact of a stronger U.S. dollar. The pizza chain has been behind an international push, opening 194 new locations, mostly overseas, over the quarter. Net income of 67 cents a share was below estimates of 74 cents.
Fiat Chrysler (FCAU) - Get Report added 1.4% after it reached a tentative labor agreement with the United Auto Workers that prevented a strike at its U.S. factories. The agreement needs to be ratified by Fiat's 40,000 union workers in the U.S. No terms of the deal were disclosed.