Stocks Finish Mixed Ahead of Jobs Report

NEW YORK ( TheStreet) - Stocks finished mixed, with the Dow snapping its four-day winning streak, as so-so retail sales and a slight miss on initial jobless claims dampened optimism ahead of the December employment report on Friday.

The Dow Jones Industrial Average lost 27 points, or 0.2%, to settle at 11,695, marking its first pullback of 2011. The S&P 500 fell 3 points, or 0.2%, to close at 1,274, while the Nasdaq tacked on 8 points, or 0.3%, at 2,710.

Basic materials and energy stocks were the session's worst performers as a stronger U.S. dollar minimized the appeal of dollar-priced commodities. Alcoa ( AA), which will be the first Dow component to report its quarterly results on Monday, was among the biggest laggards among the blue chips, sliding 1.4%. The dollar index was up 0.8%.

Verizon ( VZ) and AT&T ( T) were also prominent among the losers within the Dow, which saw 22 of its 30 components finish lower.

Buying was selective among blue chips, however, with Boeing ( BA), Hewlett-Packard ( HPQ), IBM ( IBM), Merck ( MRK) and Microsoft ( MSFT) all gaining more than 1% .

Expectations are running high for the December jobs report on Friday. The number of people filing for jobless claims for the first time rose by 18,000 to 409,000 during the week ended Jan. 1 from a revised 391,000 in the previous week, the Labor Department said early Thursday. Economists had expected claims to increase by 17,000, according to Briefing.com.

>>December Jobs Report- What To Expect

Wednesday brought the first of several December labor reports leading up to Friday's release of the government's employment situation report, which includes the read on non-farm payrolls. Automated Data Processing's employment change report showed that the private sector added 297,000 jobs in December , which was more than double the increase of 100,000 positions that economists had expected. In November, the ADP report showed growth of 92,000.

Phil Orlando, chief equity market strategist at Federated Investors, said the initial jobless claims data has been affected by seasonal factors and shouldn't significantly dampen expectations for the government's December employment report on Friday. However, he acknowledged that some of the weakness during Thursday's session could be profit-taking by bears anticipating a miss on Friday.

Orlando is expecting job growth of more than 200,000, much higher than the consensus expectations for job creation of 150,000, according to Briefing.com.

"I think the job cycle is exactly where it needs to be to start producing solid jobs. Economic data has strengthened, and we got the tax compromise out of Washington, which, I think, has been very constructive in terms of helping small- to medium-sized businesses plan for the future," he said.

"I think we'll see very strong job growth tomorrow and this little weakness will reverse and that triggers a very favorable January barometer. As they say: 'As the first week of January goes, so goes the month, and as the first month goes, so goes the year.'"

Retail stocks were also in focus Thursday after ho-hum December sales numbers . Of the 26 retailers tracked by The Street, 13 missed expectations, 12 topped forecasts and one fell in-line with estimates.

Shares of Macy's ( M) were down 4% to $23.97 after reporting a 3.9% December sales gain, missing analysts' estimates for an increase of 4.5%. Target's ( TGT) stock plunged 6.8% to $54.93 after it missed forecasts for a sales boost of 4% with a 0.9% uptick. Meanwhile, Abercrombie & Fitch ( ANF) said sales rose 15%, compared with expectations for an increase of 10.9%. The stock, however, declined 3.3% to $53.53.

The Retail HOLDRs ETF ( RTH) was down 1.5% at $105.06.

In other news, Treasury Secretary Timothy Geithner said the U.S. may reach its $14.3 trillion legal limit to borrow by the end of March. Congress will likely raise the limit to bypass the possibility of default.

President Obama appointed JPMorgan Chase ( JPM) executive and former Commerce Secretary Bill Daley as the White House Chief of Staff.

Volume on the New York Stock Exchange was 596 million while 1.3 billion shares changed hands on the Nasdaq exchange. Breadth was weighted to the downside with 61% of stocks losing ground while 36% moved higher.

Valeant Pharmaceuticals International ( VRX) was seeing the strongest gains on the New York Stock Exchange after it forecast better-than-expected 2011 earnings of at least $2.25 a share. The stock was up 18.7% to $35.55.

Shares of Constellation Brands ( STZ) tanked 8% to $19.84 despite beating analysts' quarterly estimates and lifting its full-year outlook as the market focused on a sales dip of 2% on weak wine sales .

Monsanto's ( MON) stock was up 2% to $70.79 after the seed producer met profit expectations and posted first-quarter sales growth of 7.8% to $1.8 billion.

Merck said the Food and Drug Administration has accepted its approval filing for its hepatitis C drug while rival Vertex Pharmaceuticals ( VRTX) is still waiting to hear from the FDA regarding its approval filing for its hepatitis C drug. Merck's stock was up 1.4% at $36.92 while Vertex's stock was off by 1.7% at $36.20.

Shares of casual-dining restaurant chain Ruby Tuesday ( RT) were up 5.4% at $14.77 after it beat quarterly earnings expectations by 2 cents per share with a profit of $4.6 million, or 7 cents per share.

Shares of NVIDIA ( NVDA) jumped 14% to $19.33 on news that its new Tegra mobile chips are in tablets and smartphones made by Motorola ( MOT) and Dell ( DELL).

Shares of Moody's ( MCO) soared 8.6% to $29.67 after it boosted its 2010 profit outlook ahead of its fourth quarter earnings.

Shares of Sara Lee ( SLE) finished flat after a temporary drop following a Wall Street Journal report that the company may split its meat and coffee units

In commodity markets, the February crude oil contract shed $1.92 to settle at $88.38 a barrel. The February gold contract was down by $2 to settle at $1,371.70 an ounce.

The benchmark 10-year Treasury note rose 16/32, diluting the yield to 3.401%.

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Hong Kong's Hang Seng rose 0.1%, and stocks in Japan rose to a nearly eight-month high on a weaker yen . The Nikkei gained 1.4%. London's FTSE was shed 0.4%, and the DAX in Frankfurt added 0.6%.

-- Written by Melinda Peer and Shanthi Bharatwaj in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.