NEW YORK (AP) - Stocks are dropping as a rise in weekly jobless claims dampens hopes about a key employment report Friday.
A recovery in employment is seen as the biggest obstacle to a rebound in the economy and the unexpected increase in weekly unemployment claims Thursday is providing a reminder that a recovery will be difficult.
The Labor Department says unemployment claims rose 8,000 to a seasonally adjusted 480,000 last week. Economists had predicted claims would drop to 460,000.
Friday's January report is expected to show employers added a small number of jobs.
The government also reports today that worker productivity rose more than expected in the October-December quarter as companies squeezed more output from their employees.
The Labor Department says productivity rose by a seasonally adjusted 6.2 percent in the fourth quarter, above analysts' expectations of a 6 percent rise.
The increase follows two quarters of sharply rising productivity.