Stocks edged lower on Thursday as investors took profit after a mixed bag of economic data, while stellar earnings from Qualcomm helped buoy the Nasdaq.
Even with the retreat, the S&P 500 is on track to post its best month since October 2011 and its best start to a year since 1997.
Investors are expecting a pullback in equities after recent gains, though they have bought on dips over the past four weeks, analysts said. The largest daily decline on the S&P 500 so far in 2013 was Thursday's 0.39 percent drop, after data showed the economy contracted in the last quarter of 2012.
"This is a highly rotational market," said Janelle Nelson, portfolio analyst at RBC Wealth Management in Minneapolis, noting how investors dive into beaten-down sectors on the smallest encouraging news.
Job market data released earlier on Thursday showed mildly positive signs for a still-fragile economy, with jobless claims slightly higher and incomes growing at the best pace since 2004.
Those reports come ahead of Friday's payrolls report, which is expected to show employers added 160,000 jobs in January after an increase of 155,000 in December. Friday will also bring reports on consumer confidence, U.S. manufacturing, construction spending and car sales.
"The market's lack of movement is due in part to the large number of economic releases coming out tomorrow," said Nelson.
Qualcomm Inc gained 4.6 percent to $66.43 as the top boost to the Nasdaq Composite after the world's leading supplier of chips for cellphones beat analysts' expectations for quarterly profit and revenue, and raised its targets for the year.
Facebook Inc lost 2.5 percent to $30.47, a day after the social network company said it doubled its mobile advertising revenue in the fourth quarter. However, growth trailed some of Wall Street's most aggressive estimates.
The Dow Jones industrial average <.DJI> fell 34.71 points or 0.25 percent, to 13,875.71; the S&P 500 <.SPX> lost 4.04 points or 0.27 percent, to 1,497.92 and the Nasdaq Composite <.IXIC> dropped 1.74 points or 0.06 percent, to 3,140.57.
The S&P 500 has advanced 5 percent in January after legislators in Washington temporarily sidestepped a "fiscal cliff" of automatic tax increases and spending cuts that could have derailed the economic recovery, and in the wake of better-than-expected corporate earnings.
United Parcel Service Inc lost 2 percent to $79.63 after reporting fourth-quarter earnings that were below analysts' estimates on Thursday and forecasting weaker-than-expected profit for 2013.
Kirby Corp added 6.6 percent to $70.87 and Ryder Systems Inc climbed 2.9 percent to $55.81 after posting quarterly results.
Thomson Reuters data through Thursday morning shows that of the 231 companies in the S&P 500 that have reported earnings this season, 69.3 percent have exceeded expectations, a higher proportion than over the past four quarters and above the average since 1994.
Overall, S&P 500 fourth-quarter earnings are forecast to have risen 3.7 percent. That's above a 1.9 percent forecast at the start of the earnings season, but well below a 9.9 percent profit growth forecast on October 1, the data showed.
WMS Industries Inc surged 52.6 percent to $24.98 after the company agreed to be acquired by Scientific Games Corp for $26 per share in cash. Scientific Games jumped 11.9 percent to $9.99.
(Additional reporting by Chuck Mikolajczak; Editing by Bernadette Baum)