Stocks fall after drop in retail, financial shares

NEW YORK -- A late-day slide left stocks lower Thursday following a disappointing forecast from department store chain Kohl's and a drop in financial shares.

The Dow Jones industrial average ended down about 114 points after shooting up by nearly 149 on Wednesday. Stocks mostly made modest moves for much of Thursday's trading but fell in the final hour. The drop signaled that traders remain on edge and not sure about the market's direction.

Kohl's Corp. slid 5.8 percent and dragged other consumer stocks lower after its increased forecasts fell short of what analysts had been expecting.

Bank stocks fell on reports that New York's attorney general is examining eight banks to determine whether they misled ratings agencies about mortgage securities.

Tech shares also got hit after investors saw a forecast from computer networking equipment Cisco Systems Inc. as cautious. The stock fell 4.5 percent to post the steepest drop among the 30 stocks that make up the Dow.

Meanwhile, a report on the job market signaled that gains are proceeding slowly. The Labor Department said first-time claims for jobless benefits dipped to 444,000 last week from an upwardly revised 448,000 the previous week. Economists had expected claims to drop to 440,000.

While a fourth straight weekly decline in claims is a welcome sign, it hasn't been enough to signal sustainable job growth. Economists estimate weekly initial claims need to fall below 425,000 to show employers are consistently adding workers. Claims have stalled around the 450,000 level throughout the year.

High unemployment remains a major obstacle to a strong recovery. The unemployment rate jumped to 9.9 percent last month, although employers added 290,000 jobs. Investors want to see consistent job creation as well as regular declines in claims for jobless benefits before becoming confident that the labor market is healing.

"The initial jobless claims are still going the wrong way," said Dave Rovelli, managing director of trading at brokerage Canaccord Adams in New York.

According to preliminary calculations, the Dow fell 113.96, or 1.1 percent, to 10,782.95. The Standard & Poor's 500 index fell 14.23, or 1.2 percent, to 1,157.44, while the Nasdaq composite index fell 30.66, or 1.3 percent, to 2,394.36.