Wall Street's main indexes slipped on Thursday as investors weighed data showing a steady jobs market recovery against a rise in producer prices, ahead of earnings reports from major companies including Walt Disney.
The Labor Department's report showed the number of Americans filing new claims for unemployment benefits fell last week, as expected, while a separate reading showed US producer prices rose more than expected through July.
The inflation reading came on the heels of data that showed growth in consumer prices appeared to be slowing. The consumer price index and personal consumption data are usually the preferred inflation gauges of the Federal Reserve.
"The inflationary transitory camp is winning the debate and as the fear of inflation somewhat ebbs ... equities have a certain tendency to outperform," said Sebastien Galy, senior macro strategist at Nordea Asset Management.
The benchmark S&P 500 and the blue-chip Dow Jones Industrial Average logged record closing highs on Wednesday, as investors moved into economy-linked value stocks from technology-heavy shares following the passage of a large infrastructure bill.
The S&P 500 value index has gained 1.8% so far this month and is on track to outperform its growth counterpart for the first time since June.
Dollar edges higher after US producer prices surge
"They're mostly cyclical, are cheap, and therefore people feel more comfortable about holding value, particularly if they think that the business cycle is going to improve going forward, as evidenced by lower inflation and a better labor market," Galy said.
At 10:27 am ET, the Dow Jones Industrial Average fell 96.81 points, or 0.27%, to 35,388.16, the S&P 500 lost 5.19 points, or 0.12%, to 4,442.51 and the Nasdaq Composite lost 16.50 points, or 0.11 %, to 14,748.64.
Nine of the 11 major S&P sectors declined in early trading, with energy down 1%, followed by economy-linked industrials and materials.
Micron Technology slipped 6.5% to the bottom of the S&P 500 after Morgan Stanley downgraded the stock to "equal-weight".
In earnings-related moves, Baidu Inc's US shares fell 3.3% even after the company posted upbeat quarterly revenue, buoyed by a rebound in advertising sales and higher demand for its artificial intelligence and cloud products.
EBay Inc slipped 1.6% after forecasting third-quarter revenue below analysts' estimates, signaling that reopening economies and vaccine rollouts could be putting an end to the pandemic-led shopping boom.
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Palantir Technologies Inc gained 9.4% after the US data analytics firm forecast third-quarter sales above expectations.
Earnings report from Walt Disney Co, home rental firm Airbnb Inc and food-delivery firm DoorDash Inc are due later in the day.
Declining issues outnumbered advancers by a 1.6-to-1 ratio on the NYSE and by a 1.9-to-1 ratio on the Nasdaq.
The S&P index posted 34 new 52-week highs and one new low while the Nasdaq recorded 66 new highs and 90 new lows.