Wall St.: Worried about the economy

NEW YORK (CNNMoney.com) -- Stocks struggled Thursday afternoon, with investors caught between wanting to scoop up recently-battered shares and wanting to step back amid worries about the speed of the economic slowdown.

The Dow Jones industrial average (down 17.85 to 12,013.17, Charts) lost 0.2 percent with roughly 2 hours left in the session. The broader S&P 500 (down 1.11 to 1,366.70, Charts) index lost a few points, as did the tech-fueled Nasdaq composite (down 1.77 to 2,332.58, Charts).

Stocks have slipped for two sessions, with investors taking profits on the most recent leg of the rally in response to a series of weak economic reports.

The same trend seemed to emerge Thursday, following a weak read on factory orders, a jump in a key inflation reading and some disappointing retail sales. But the tone of the market improved as the session wore on, suggesting that the selloff may be petering out.

"Retail reports were not great this morning, the economic news wasn't so good, but yet we seem to be trying to come back," said Joseph Saluzzi, co-head of equity trading at Themis Trading.

Saluzzi said the market's recovery attempt was important after Wednesday's big selloff. Should stocks move higher throughout the afternoon, that would be a positive indication that the recent declines were a one or two day hiccup, rather than something more substantial, he said.

A preliminary read on third-quarter productivity came in unchanged, versus forecasts for a rise of 1.1 percent.

Unit labor costs, the report's inflation component, jumped 3.8 percent, topping forecasts and reviving concerns about wage inflation.

Another report showed September factory orders rose 2.1 percent, missing expectations for a rise of 3.6 percent. Orders fell 0.3 percent in the previous month.

A separate report showed a bigger-than-expected jump in weekly jobless claims. However, it was overshadowed by anticipation about Friday's monthly employment report.

Investors also took in afternoon comments from Dallas Federal Bank President Richard Fisher, who is not a voting member of the Federal Reserve's policy-setting committee. Fisher said recent inflation readings have been encouraging, but pricing pressure is still too aggressive.

Wall Street digested a wave of mostly sluggish October sales from big retailers.

Among the standouts, Wal-Mart Stores (down $0.64 to $48.21, Charts) said sales at stores open at least a year, known as same-store sales, rose just 0.5 percent in the month. That was lower than the company's recently reduced forecast for growth of 1 percent. Shares fell 1.2 percent.

Rival Target (down $0.64 to $57.06, Charts) posted a 3.9 percent rise in same-store sales, missing forecasts and sending its stock down about 1 percent.

Chico's FAS (down $1.88 to $21.37, Charts) reported a 4.1 percent drop in sales and cut its earnings forecast to a range that's below analysts' forecasts. Shares of the women's clothing retailer fell 8 percent in active New York Stock Exchange trading.

Gap (down $1.14 to $19.50, Charts) said sales fell 7 percent, versus analysts' expectations for a decline of 2.4 percent. Following the news, Citigroup (Charts) downgraded the stock to "hold" from "buy."

Among other movers, Dell (up $0.77 to $24.79, Charts) jumped 3 percent after Goldman Sachs upgraded the stock to "neutral" from "sell," according to a Reuters report.

Software maker CA (up $0.57 to $25.27, Charts) gained 2 percent on news that Sanjay Kumar, the former CEO, was sentenced to 12 years in prison Thursday for his part in an accounting scandal at the company. The company reports earnings tonight.

Market breadth was negative. On the New York Stock Exchange, losers topped winners by nine to seven on volume of 1.10 billion shares. On the Nasdaq, decliners beat advancers four to three on volume of 1.26 billion shares.

U.S. light crude oil for December delivery fell 41 cents to $58.30 a barrel on the New York Mercantile Exchange.

Treasury prices slumped on the morning economic news, raising the yield on the 10-year note to 4.59 percent from 4.56 percent late Wednesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar fell against the euro and was little changed against the yen.

COMEX gold for December delivery added $5.40 to $624.70 an ounce.

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