US STOCKS-Wall St declines on jobless claims, retail sales

                                
 
                                
 * Initial jobless claims unexpectedly rose last week
                                
 * Caution prevails ahead of monthly jobs report Friday
                                
 * July retail sales up less than forecast
                                
 * Dow off 0.2 pct, S&P down 0.3 pct, Nasdaq off 0.4 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
 (Updates to late afternoon, changes byline)
                                
 By Chuck Mikolajczak
                                
 NEW YORK, Aug 5 (Reuters) - U.S. stocks slipped on
Thursday as an unexpected rise in initial jobless claims and
unimpressive July retail sales highlighted the uneasy economic
climate ahead of tomorrow's payrolls report.
                                
Government data showed initial claims for jobless benefits
rose to 479,000, the highest level since early April. The
report heightened investor caution a day before Friday's key
monthly jobs report and countered some of the optimism
generated by Wednesday's ADP report, which showed a
larger-than-expected gain in private employer hiring. For
details, see [ID:nN05245807]
                                
 "It's just a matter of caution ahead of tomorrow," said
Paul Mendelsohn, chief investment strategist at Windham
Financial Services in Charlotte, Vermont.
                                
 "There are so many uncertainties out there for businesses
and consumers, yet the market has wanted to climb that wall of
continuing worry here over the last couple of weeks."
                                
 The S&P 500 has climbed nearly 10 percent since hitting
its closing low for the year on July 2, largely in response to
better-than-expected earnings.
                                
 The Dow Jones industrial average <.DJI> dropped 21.80
points, or 0.20 percent, to 10,658.63. The Standard & Poor's
500 Index <.SPX> shed 3.34 points, or 0.30 percent, to
1,123.90. The Nasdaq Composite Index <.IXIC> slipped 9.82
points, or 0.43 percent, to 2,293.75.
                                
 Economists polled by Reuters are expecting Friday's U.S.
Labor Department report to show a drop of 65,000 in non-farm
payrolls in July as temporary U.S. Census Bureau jobs dried
up. Private employers are expected to have added 90,000 jobs.
[ECI/US]
                                
 Weakness in consumer spending trends also stayed in focus
as the 28 retailers tracked by Thomson Reuters reported July
same-store sales that rose only 2.9 percent -- falling short
of analysts' expectations for a 3.1 percent gain.
 [ID:nN05219163]
                                
 Among retailers, department store operator JC Penney Co
Inc <JCP.N> stumbled 7.3 percent to $22.21 while
youth-oriented apparel chain Aeropostale Inc <ARO.N> slumped
6.5 percent to $25.66.
                                
 The Morgan Stanley Retail index <.MVR> shed 0.6 percent.
                                
 After five straight days of gains, the Morgan Stanley
Healthcare Payor index <.HMO> dropped 0.9 percent, dragged
lower by Molina Healthcare Inc <MOH.N>, which tumbled 10.8
percent to $28.28 after the health insurer posted quarterly
results that fell short of revenue expectations and said it
would offer 4 million shares. [ID:nSGE6730OF] and
[ID:nASA00LZC]
                                
 The drop in Molina shares overshadowed a 5.3 percent gain
in Cigna Corp <CI.N> to $33.86 after the insurer reported a
far higher-than-expected profit in the second quarter and
raised its full-year forecast. [ID:nN05203383]
 (Reporting by Chuck Mikolajczak; Editing by Jan Paschal)