Stocks fell sharply on Thursday, a day after the S&P and the Nasdaq rose to record levels, amid increased caution about soaring valuations and signs of a slowing economic recovery. On the employment front, first-time claims for state unemployment benefits fell by 130,000 to a seasonally adjusted 881,000 for the week ended August 29, though the decline largely reflected a change in Labor Department methodology. Continuing claims, reported with a one-week lag, fell by 1.238 million to 13.254 million. The data came ahead of the government's August employment report on Friday morning. The Bloomberg consensus calls for the addition of 1.35 million payroll jobs, down from