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Report on rise in jobless applications last week causes slip in stock markets

Stocks slipped Thursday after the government reported an increase in applications for unemployment benefits last week.

The Labor Department said Thursday that 409,000 people made first-time claims for benefits. That's up 18,000 from the previous week, when applications fell to their lowest level in more than two years. The number of applications suggests that companies are adding jobs, but slowly.

The report came a day after ADP estimated that companies added nearly 300,000 jobs last month, far more than the 100,000 economists expected. That report pushed stock prices higher and Treasury prices lower as investors became more optimistic about the job market.

In a week with several reports on employment, the most important one will arrive this morning when the Labor Department releases its monthly survey of all U.S. payrolls and the unemployment rate. Economists expect the rate fell to 9.7 percent in December from 9.8 percent the previous month.

The Dow Jones industrial average fell 25.58 points, or 0.2 percent, to close at 11,697.31.

The Standard & Poor's 500 index fell 2.71, or 0.2 percent, to close at 1,273.85. The Nasdaq composite index rose 7.69, or 0.3 percent, to 2,709.89.

Three stocks fell for every two that rose on the New York Stock Exchange. Volume was 1 billion shares.

Bond prices rose, sending their yields lower. The yield on the 10-year Treasury note fell to 3.40 percent from 3.46 percent late Wednesday.

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