NEW YORK -- The Dow drifted lower Thursday, but stayed on track for its best start to the year in more than two decades.
The Dow Jones industrial average fell 18 points to 13891 as of 1:24 p.m., paring its gain for the month to 6 percent. The index is still in line for its best January performance since 1989, according to data from S&P Dow Jones Indices.
The Standard and Poor's 500 fell two points to 1500, trimming its advance for the month to 5.2 percent. The Nasdaq composite rose 3 points to 3146.
United Parcel Service Inc. fell $1.75 to $79.48 after is said that it was slowed down in the fourth quarter by weak global trade and a disappointing holiday-shopping season. The company is also forecasting 2013 results that are below analyst's expectations. Qualcomm Inc., a maker of chips for mobile devices, rose $3.04 to $66.58 after company said late on Wednesday that its net income surged, as revenue was boosted by growing global demand for smartphones.
Stocks got a small lift early Thursday from a report on business activity in the Chicago area before drifting lower. The Chicago Business Barometer for January came in at 55.6, a higher reading than analysts had forecast, according to data provider FactSet. Readings above 50 indicate that economic activity is expanding.
January's rally slowed Wednesday after a report showed that the economy unexpectedly contracted in the fourth quarter of last year. Stocks have been rising close to record levels after lawmakers reached a budget deal to prevent the U.S. from going over the "fiscal cliff,'' and on optimism that the housing market is recovering and that firms are slowly starting to hire more workers.
The Dow has gained in the month of January three years in a row, and this year's performance is the best since the indexed surged 8.01 percent in 1989.
Stocks have gained against a backdrop of low borrowing costs and a slow, but steady, economic recovery. However, the market may struggle to build on those gains in the immediate future as traders and investors turn their attention back to Washington, said Ernie Cecilia, chief investment officer at Bryn Mawr Trust.
The budget deal struck at the start of the year dealt with taxes, but across-the-board spending cuts were pushed back from Jan. 1 to March 1. While a showdown over the nation's borrowing limits appears to have been put off, lawmakers have yet to agree on how best to reduce government spending. Those negotiations could be protracted and increase stock market volatility, said Cecilia.
Stocks slumped in the 10 days following the election Nov. 6 as investors fretted that the divided government would fail to come up with a budget deal to avoid the "fiscal cliff.''
More government reports Thursday also gave investors a better picture of the health of the economy.
The number of Americans seeking unemployment aid rose sharply last week but remained at a level consistent with moderate hiring. Weekly applications for unemployment benefits leapt 38,000 to a seasonally adjusted 368,000, the Labor Department said Thursday. The increase comes after applications plummeted in the previous two weeks to five-year lows.
U.S. consumers increased their spending in December at a slower pace, while their income grew by the largest amount in eight years, a report showed on Thursday. Consumer spending rose 0.2 percent last month, at a slightly slower than the 0.4 percent increase in November, the Commerce Department said.
Investors will look for further clues about the strength of the jobs market Friday, when the closely followed monthly nonfarm payrolls report is published.
The yield on the 10-year Treasury note, which moves inversely to its price, was little changed at 1.99 percent.
Among other stocks making big moves:
• Under Armour gained $2.85 to $50.98, after the company said its fourth-quarter earnings jumped 10 percent and the clothing company predicted revenue growth of at least 20 percent in each of the next two years.
• CononcoPhillips fell $3.01 to $58.09 after the oil company said earnings fell as prices for oil and natural gas declined. The Houston-based company also said 2013 production would decline.
• JDS Uniphase added $2.11 to $14.51 after the technology company reported stronger-than-expected earnings on improved revenue and margins late Wednesday.
• Constellation Brands slid $6.67 to $32.50 after the Justice Department sued to stop Anheuser-Busch InBev's proposed $20.1 billion purchase of Mexican brewer Grupo Modelo, which would unite the ownership of popular beers like Budweiser and Corona. Constellation, a liquor and wine producer, was set to expand as part of a side deal in the merger.