Wall St. worried about employment

NEW YORK (CNNMoney.com) -- Stocks seesawed in choppy trade Thursday afternoon as investors geared up for Friday's big monthly jobs report.

The Dow Jones industrial average (up 7.85 to 12,317.10, Charts) lost a few points with roughly 2 hours left in the session. Earlier, the blue-chip average had topped its record closing high from November and flirted with a new record trading high before backing off.

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The broader S&P 500 (down 0.88 to 1,412.02, Charts) index was little changed, after briefly topping a six-year high hit earlier in the week. The tech-fueled Nasdaq (down 2.78 to 2,443.08, Charts) composite lost 0.1 percent.

The three major gauges had risen across the board in the morning as investors attempted to crawl back after Wednesday's modest selloff. However, any advance was limited by concerns about the November jobs report, due Friday.

"I think we're a little hesitant ahead of this major economic report," said Todd Salamone, director of trading at Schaeffer's Investment Research.

"That's certainly the case with the major gauges trading near their November highs, in a market where investors are a little on edge," he added.

He said investors are on edge because they have been getting mixed signals lately about the pace of the economic slowdown.

A private employment services firm released a report Wednesday that suggested stronger-than-expected payroll growth in November, and Thursday's weekly survey showed a bigger-than-expected drop in new claims for unemployment.

All of which suggests Friday's report could show that employers added more than the 105,000 jobs to their payrolls than economists surveyed by Briefing.com are currently expecting, on average.

A number that is just slightly better than estimates might reassure investors concerned about the economic slowdown. However, a payrolls number substantially above forecasts could raise worries about wage inflation, something the Federal Reserve Board has said it is monitoring.

The Fed holds its last monetary-policy meeting of the year next Tuesday and is widely expected to leave a key short-term interest rate unchanged for the fourth time in a row. The Fed funds rate currently stands at 5.25 percent, after the central bank boosted rates 17 straight times over a two-year period.

On Thursday, the European Central Bank (ECB) boosted its benchmark lending rate by a quarter-percentage point to 3.50 percent, as expected. However, the bank implied it might not raise rates again at its next meeting and also lowered its 2007 forecast on inflation, due to lower oil prices.

In corporate news, Home Depot (down $0.65 to $39.27, Charts) said that a review showed it had unrecorded expenses of about $200 million connected to stock options, but that fixing the problem would have little effect on its finances.

Home Depot, a Dow stock, is one of many companies facing probes into the potential manipulation of stock option grants.

Fannie Mae, the mortgage financer, said late Wednesday that it overstated earnings between 2001 and 2004 by $6.3 billion, a smaller amount than had been expected in the aftermath of the company's accounting scandal.

Fannie Mae (up $1.47 to $59.97, Charts) shares gained more than 2 percent Thursday.

General Motors (up $0.12 to $29.49, Charts) said late Wednesday that its market share has bottomed out and that it sees crossover vehicles as the means of driving market share gains in the future.

Among technology decliners, Oracle (down $0.29 to $17.59, Charts) slipped for a second session after Lehman Bros. said Wednesday that investors should sell the stock ahead of the company's quarterly earnings report.

Cree (down $2.44 to $18.67, Charts) slumped 13 percent on the Nasdaq after the chipmaker warned that fiscal second-quarter revenue would miss estimates due to weaker-than-expected orders for its chips used in mobile phones.

Other chipmakers slipped too, including Altera (down $0.35 to $19.86, Charts) and National Semiconductor (down $0.57 to $24.23, Charts) - which reports quarterly earnings later Thursday.

Other tech sliders included Dell (down $0.09 to $26.49, Charts), eBay (down $0.51 to $31.65, Charts) and Apple Computer (down $1.70 to $88.13, Charts).

A variety of homebuilders slipped after rising for the last few sessions. Decliners included Lennar (down $0.69 to $53.48, Charts), Hovnanian (down $0.94 to $37.07, Charts) and Toll Brothers (down $0.92 to $32.09, Charts).

On the upside, a variety of gold, silver and steel shares gained, with the commodities seeing a bounce after several down sessions.

Among other movers, Vanda Pharmaceuticals (up $10.15 to $25.65, Charts) jumped 70 percent in unusually active Nasdaq trade after its experimental schizophrenia drug was effective in a late-stage trial.

Market breadth was mixed. On the New York Stock Exchange, advancers narrowly beat decliners on volume of 940 million shares. On the Nasdaq, losers and winners were roughly even on volume of 1.4 billion shares.

U.S. light crude oil prices for January delivery added 7 cents to $62.26 a barrel on the New York Mercantile Exchange.

COMEX gold fell $4.80 to $631.10 an ounce.

Treasury prices inched lower, raising the yield on the benchmark 10-year note to 4.50 percent from 4.48 percent late Wednesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar fell versus the yen. The greenback was little changed versus the euro on the ECB news.

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