Wall Street edges lower ahead of a highly anticipated jobs report

Wall Street drifted to a quiet close Thursday as pressure from the bond market remained high due to worries about a too-hot U.S. job market.

The S&P 500 slipped 5.56, or 0.1%, to 4,258.19, a day before a highly anticipated report on the job market that could sway the Federal Reserve's view on interest rates. The Dow Jones Industrial Average edged down by 9.98 points, or less than 0.1%, to 33,119.57. The Nasdaq composite dipped 16.18, or 0.1%, to 13,219.83.

Stocks have struggled since the summer under the weight of soaring Treasury yields in the bond market, which undercut stock prices and crimp corporate profits. Yields have leaped as traders acquiesce to a new normal where the Federal Reserve is likely to keep its main interest rate at a high level for a long time, as it tries to extinguish high inflation.

Treasury yields wavered up and down Thursday after a report showed fewer U.S. workers applied for unemployment benefits last week than economists expected. That's a sign fewer workers are getting laid off than expected, which is normally a good sign.

But the worry now is that too strong of a job market could put upward pressure on inflation. That's why the Fed has raised its main interest rate to the highest level since 2001, to intentionally slow the job market.

“Even as the Fed has taken aggressive action to soften labor market conditions, businesses continue to hold on to workers,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

A more comprehensive report on the overall U.S. job market is due Friday, and economists expect it to show hiring slowed to a pace of 163,000 jobs added in September from 187,000 in August.

After initially jumping on the jobless claims report, the yield on the 10year Treasury later pulled back. The 10-year yield was at 4.71%, down from 4.73% late Wednesday. Earlier this week, it hit its highest level since 2007.