Stocks struggle ahead of jobs

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NEW YORK (CNNMoney.com) -- Stocks struggled Thursday, ending mixed, as investors mulled a jump in factory orders, near record oil and gold prices and a stronger-than-expected reading on private sector employment ahead of Friday's government jobs report.

The Dow Jones industrial average (INDU) added a few points. The broader S&P 500 (INX) index ended unchanged and the Nasdaq (COMPX) composite lost 0.3 percent.

Treasury prices rose, lowering the corresponding yields. The dollar fell versus the yen and euro. Oil prices briefly hit a record trading high above $100 a barrel before retreating. Gold prices closed at a new high.

Stocks tumbled Wednesday, the first trading day of 2008, as record oil and gold prices and a report showing contraction in the manufacturing sector raised worries about the threat of recession.

Such worries remained in place Thursday, as the price of oil hit a fresh trading record above $100 a barrel. But concerns about the implications for the economy were tempered a bit by stronger reports on employment and factory orders.

ADP, a payroll services firm, reported that private sector employment grew by 40,000 in December, topping forecasts for 33,000.

The ADP reading can sometimes be an indicator for the bigger government report, due this Friday. That report is expected to show employers added 70,000 jobs to their payrolls after adding 94,000 jobs in November.

However, the report would have to show especially robust growth for it to counter worries about the economic outlook, said Peter Cardillo, chief market economist at Avalon Partners.

"Even if we get an exceptionally strong payrolls report, it's not going to reverse fears that we're headed toward meager or even no growth in the first quarter," he said.

The unemployment rate, generated by a separate survey, is expected to have risen to 4.8 percent in the month from 4.7 percent in the previous month. Average hourly earnings, the report's inflation component, is expected to have risen 0.3 percent after rising 0.5 percent in the previous month.

Investors will also be reacting Friday to the results from Thursday's Iowa caucuses, which kick off the 2008 presidential election. However, Wall Street's reaction is expected to be pretty minimal until the race gets further underway.

In the latest subprime fallout, State Street (STT, Fortune 500) said it will take a $279 million fourth-quarter charge to cover expected legal costs relating to poor performing fixed income funds, particularly those invested in debt backed by subprime mortgages. The company also said that the president and chief executive of State Street Global Advisors, its investment management unit, has resigned.

Separately, credit ratings agency Fitch Ratings cut its outlook on the company to negative from stable. Despite all this, shares rose 8 percent, perhaps on relief that the news wasn't even worse.

Automakers were reporting sales throughout the day. Ford Motor (F, Fortune 500) said sales dropped 9 percent in December, although that was improvement from an especially weak November. General Motors (GM, Fortune 500) said sales fell 5 percent, versus forecasts for a drop of 5.6 percent.

Sciele Pharma (SCRX) shares jumped 11.4 percent in unusually active Nasdaq trade after the company received regulatory approval to sell a new version of its high blood pressure drug Sular.

On the downside, Intel (INTC, Fortune 500) shares continued to slide one day after Banc of America Securities downgraded the stock, along with other chipmakers.

CVS Caremark (CVS, Fortune 500) shares fell 6.6 percent in active New York Stock Exchange trade after the drugstore chain and pharmacy benefits manager reported weaker than expected December sales and said that fourth-quarter earnings could miss forecasts.

Rite Aid (RAD, Fortune 500) and Walgreen (WAG, Fortune 500) shares both slumped after the drugstore chains reported weaker December sales at stores open a year or more, a retail metric known as same-store sales.

Market breadth was mixed. On the New York Stock Exchange, winners topped losers by a narrow margin on volume of 1.32 billion shares. On the Nasdaq, decliners topped advancers by over three to two on volume of 1.94 billion shares.

Ahead of the December employment report, investors eyed the government's weekly unemployment report, which showed a bigger-than-expected drop in the number of Americans filing claims last week.

Also released Thursday: the November factory orders report, which showed a rise of 1.5 percent in the month after a rise of 0.7 percent in the previous month. Economists thought it would rise 1 percent.

U.S. light crude oil for February fell 44 cents to end the session at $99.18 a barrel, after hitting a record trading high above $100 a barrel during the session. The price had swayed after the morning release of a mixed weekly oil inventories report.

COMEX gold for February delivery rose $9.10 to settle at $869.10 an ounce, building on an all-time high hit Wednesday.

Treasury prices rose, erasing early losses. The yield on the 10-year note stood at 3.89 percent, down from 3.91 percent late Wednesday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar slipped versus the yen and the euro.