NEW YORK (Reuters) - U.S. stock were flat to lower on Thursday as investors turned cautious a day ahead of the closely watched U.S. jobs report.
The U.S. Labor Department's non-farm payrolls report on Friday will not only give insight into the strength of the economic recovery, but could also offer a clue into how long the Federal Reserve will keep its stimulus policy intact.
The S&P 500 broke below its 50-day moving average of 1,604 - the first time the benchmark has dropped below that average since April 18, but then recovered to trade nearly flat. The technology sector, down 0.7 percent, led losses, while telecoms, up 1.4 percent, led gains.
However, investors remained cautious.
"I think that this is all posturing ahead of tomorrow's jobs report which will really be the most important data point that comes out this week," said Kevin Caron, market strategist at Stifel, Nicolaus & Co in Florham Park, New Jersey.
"We've had a series of data points collecting over the last month or two that shows some moderation in the economy. The employment data is a big number and it will add another piece of evidence that the economy is once again slowing down as we head into mid-year."
Earlier on Thursday, the European Central Bank left interest rates unchanged and left other policy tools untouched after discussing options it could use if the euro zone's economy does not come out of recession later this year. ECB President Mario Draghi said economic conditions did not justify moves such as requiring banks to pay to leave their money with the central bank overnight.
The Dow Jones industrial average was down 47.19 points, or 0.32 percent, at 14,913.40. The Standard & Poor's 500 Index was down 0.29 points, or 0.02 percent, at 1,608.61. The Nasdaq Composite Index was down 7.18 points, or 0.21 percent, at 3,394.30.
The S&P 500 has dropped roughly 2 percent over the past three sessions, the worst three-day performance since mid-April.
Although stocks have weakened ahead of the jobs report, economists' average forecast of 170,000 jobs added in May has held steady this week. The jobs report will come one hour before U.S. stock trading begins Friday.
Investors will scour the report for any clue on when the Fed may begin slowing its bond-buying program, which has been credited with driving U.S. equity gains this year.
The S&P 500 is up about 13 percent so far this year after repeatedly hitting record highs. Those gains were triggered in part by the belief the Fed's stimulus would remain in place.
Retail stocks were in focus as the group reported monthly sales that were largely in line with expectations. Costco Wholesale Corp (COST.O) rose 0.6 percent to $109.83.
(Additional reporting by Alison Griswold and Ryan Vlastelica, editing by Jan Paschal and Nick Zieminski)