U.S. stocks declined on Thursday, as a bigger-than-expected jump in labor costs furthered the idea that the Federal Reserve would have to hike interest rates sooner rather than later.
Investor sentiment was also deflated by a larger-than-expected drop in European inflation and the second default in 12 years by Argentina.
Exxon Mobil shares fell in early New York trading after the oil producer reported a 28 percent jump in quarterly profit. Whole Foods Market and Kraft Foods Group also declined on disappointing earnings.
Euro-zone inflation unexpectedly declined this month, highlighting the European Central Bank’s worries that the region’s economy is not healthy enough to support increased prices.
“Good news is getting overshadowed by concerns of deflation in Europe,” said Art Hogan, chief market strategist at Wunderlich Securities.
Domestic data had weekly jobless claims coming in just above expectations, but the four-week moving average still put a positive spin on the labor market.
Already lower, stock-index futures fell further after the government reported 302,000 Americans filed for jobless benefits last week, with the number coming in just above the 301,000 estimate.
In addition, the Labor Department reported U.S. labor costs rose the most in more than five years in the second quarter, with the Employment Cost Index climbing 0.7 percent, the biggest jump since the third quarter of 2008.
Read More US labor costs jump
The dollar gained against other global currencies and the 10-year Treasury yield rose 3 basis points to 2.588 percent.
Gold futures fell $7.70, or 0.6 percent, to 1287.20 an ounce; crude-oil futures fell 66 cents, or 0.7 percent, to $99.61 a barrel.
On Wednesday, stocks wavered after better-than-expected economic growth in the second quarter and a decision by the Federal Reserve to continue tapering.