Weaker than expected sales reports from retailers and another large number of claims for unemployment benefits kept stocks wavering between gains and losses Thursday.

The Dow Jones industrial average lost 41.59 points, or 0.34 percent, to 12,248.55 in trading. It had been down as many as 99 points earlier.

The Standard & Poor's 500 fell 1.61 points, or 0.12 percent, to 1,312.94. The Nasdaq composite gained 4.12, or 0.15 percent, to 2,773.31.

First-time applications for unemployment benefits, an indication of how many people are losing their jobs, fell slightly last week to 422,000. That was more than economists were expecting and well above the 375,000 level that signals that the economy is adding jobs.

"Companies are just not hiring the same number of workers that they laid off two years ago, and that's leading to a very stale jobs environment," said David Loesser, the president of the Estate Planners Group, a financial advisory firm in Washington Crossing, Pa.

Several retailers reported muted sales growth for May, adding to concerns that the U.S. economy is straining under higher costs for raw materials like oil and cotton. Companies that catered to middle- and lower-income shoppers said that higher food and gas prices cut into sales. Gap Inc. fell 4 percent after sales fell across all its brands. Target Corp. fell 1 percent after missing expectations as sales traffic slowed during the second half of the month.

Luxury retailer Saks Inc. was among the few retailers that rose. The company gained 1 percent after surpassing analysts' expectations.

Several recent reports have indicated that the U.S. economy may be slowing. On Wednesday, payroll processor ADP said that private employers added 38,000 jobs in May, down from 177,000 in April. That, along with a sharply lower reading on a key manufacturing index sent the Dow Jones industrial average down 280 points.

Many investors are turning their focus to Friday, when the government's monthly employment report will be released. Economists expect that the unemployment rate will dip to 8.9 percent from the current 9.0 percent.

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