Stocks waver after worrying jobs data

Stocks wavered Thursday following the Nasdaq's biggest gains this year, as new jobless claims came in above expectations in another sign that recent improvement in the labor market may be easing.

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Initial claims for state unemployment benefits were down by 1,000 to 388,000, but from an upwardly revised number in the prior week. Analysts expected 375,000 filings.

In other economic news, contracts to purchase previously owned homes increased solidly to a near two-year high in March, suggesting the spring selling season got off to a firmer start and offering hopes of a pickup in housing.

"They came in a lot higher than expected, which probably is raising a bit of concern again," said Phil Flynn, senior market analyst with PFG Best in Chicago. "We'll be in the slog for a while and obviously stocks took a little tumble on it. This could take some momentum away."

The worry over the economy comes as stronger-than-expected earnings, most prominently from Apple Inc, have helped drive stocks higher. Of the 200 S&P 500 companies reporting, three-fourths have topped estimates, according to Thomson Reuters data as of Wednesday.

Wednesday's rally helped purge much of the losses incurred earlier in April, when investors were worried about market prospects ahead of a seasonally weak period starting in May.

"Despite a very shaky start to April the S&P is only down 1-1/4 percent through yesterday's close," said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York. "It could actually be a flat month, which would be terrific if you think about where we stood three weeks ago."

Earnings season was in full swing as Exxon Mobil Corp , the world's largest publicly traded oil company, posted lower profit on slumping oil and gas production.

Health insurer Aetna Inc reported lower-than-expected profit after higher claim costs and administrative expenses.

Colgate-Palmolive Co posted higher income and sales. Earnings matched estimates, while sales topped expectations.

PepsiCo Inc reported a smaller dip in earnings than Wall Street expected and the soft drink and snack maker stood by its 2012 outlook.

Whirlpool Corp, the world's largest appliance maker, reported better-than-estimated net, relying on price increases and cost cuts to combat weak demand.

In another troubling sign from the euro zone, economic sentiment fell more than forecast in April as the region's economy sank into recession.

European equity markets slipped into negative territory after the data reignited concerns about the economy against a backdrop of mixed corporate earnings.

Reuters contributed to this report.