Cautious start to 2014 for U.S. stocks

NEW YORK - The U.S. stock market got 2014 off to a cautious start Thursday. Major indexes declined in early trading after ending last year at record levels. Trading has been quiet this week with many investors on vacation.

The Dow Jones industrial average fell 89 points, or 0.5 percent, to 16,486 as of 10:15 a.m. ET. The Standard & Poor's 500 index dropped 10 points, or 0.6 percent, to 1,837. The Nasdaq composite fell 30 points, or 0.7 percent, to 4,146.

The number of Americans seeking unemployment benefits last week fell by 2,000, extending a recovery in the job market. The Labor Department reported Thursday that the four-week average of claims rose 8,500 to 357,250. The average was driven up by spikes that reflected seasonal volatility around the Thanksgiving and Christmas holidays.

Stocks opened the year at lofty heights. The S&P 500 recorded its best year since 1997 last year; The Dow rose the most since 1995. The Nasdaq did far better than the Dow and S&P 500, rising 38.3 percent for the year, its best year since 2009.

The yield on the 10 year Treasury note climbed to 3 percent from 2.97 percent.

Macy's and Martha Stewart Living Omnimedia have announced an end to their bitter standoff over a breach-of-contract lawsuit involving J.C. Penney. Stewart's company and Penney signed a merchandising deal in December 2011. That prompted Macy's to sue both companies for violating its exclusive agreement with Martha Stewart. Terms of the settlement are not being released. Macy's rose 23 cents, or 0.4 percent, to $53.64. Martha Stewart Living rose 9 cents, or 2.3 percent, to $4.29.

Apple shares fell $6.38, or 1.2 percent, to $554.34 Wells Fargo cut its outlook on the stock to "market perform" from "outperform," saying the company's profit margins may come under pressure later this year.

Many investors are away this week and trading volume is expected to continue to be thin. The weekly unemployment claims numbers released Thursday are getting a lot of attention because the December employment report due out next week.

Investors will be watching how the market does in January since that can suggest how the rest of the year might turn out. The barometer has proven accurate almost 90 percent of years since 1950, according to the Stock Trader's Almanac.