NEW YORK (AP) -- Stocks slipped early Thursday as weak economic reports outweighed a batch of stronger corporate earnings.
The Dow Jones industrial average fell 38 points to 12,995 in the first half hour of trading. The S&P 500 dropped 4 points at 1,381.
Morgan Stanley rose nearly 3 percent after the bank trounced Wall Street expectations for the first quarter. UnitedHealth Group Inc. rose 1.6 percent after reporting profits that were higher than analysts were expecting. EBay, Southwest Airlines and Bank of America also beat forecasts.
Indexes were mixed in early trading but turned lower after 10 a.m. when two relatively weak economic reports came out. The Philadelphia branch of the Federal Reserve's index of regional manufacturing dropped sharply, and the National Association of Realtors said home sales fell 2.6 percent last month.
The Labor Department said applications for unemployment benefits dipped 2,000 to 386,000. When the number is above 375,000, investors take it as a sign that hiring isn't strong enough to lower the unemployment rate.
In other trading, the Nasdaq composite index edged up 8 points to 3,040.
Gold and U.S. Treasury prices rose. The yield on the 10-year Treasury note fell to 1.96 percent from 1.98 percent late Wednesday.
On Wednesday, U.S. stocks fell on worries that European efforts to help governments there pay off their debt could hit new roadblocks. The Bank of Spain had reported that bad loans at the country's banks had hit an 18-year high.
Before the opening bell Thursday, investors were nervously watching a sale of new Spanish government bonds. The auction went off without a hitch, but yields rose anyway. The yield on Spanish 10-year notes rose to 5.88 percent, an increase of 0.06 percentage point.
European markets mostly fell. Spain's IBEX index fell 2 percent, Greece's main index 1.8 percent and France's CAC-40 fell 1.5 percent.