By STAN CHOE

AP Business Writer

NEW YORK (AP) — U.S. stocks drifted lower on Thursday as financial markets locked in their final moves before a highly anticipated update coming Friday about the U.S. job market.

The S&P 500 fell 0.5% for its first drop in four days. After sprinting through May and rallying within a couple good days’ worth of gains of its all-time high, the index at the center of many 401(k) accounts has lost momentum.

The Dow Jones Industrial Average dropped 108 points, or 0.3%, and the Nasdaq composite sank 0.8%.

Trading activity in options markets suggests investors believe the next big move for the S&P 500 could come on Friday, when the U.S. Labor Department will say how many more jobs U.S. employers created than destroyed during May. The expectation on Wall Street is for a slowdown in hiring from April.

A resilient job market has been one of the linchpins that’s propped up the U.S. economy, and the worry is that all the uncertainty created by President Donald Trump’s on-and-off tariffs could push businesses to freeze their hiring.

A report on Thursday said more U.S. workers applied for unemployment benefits last week than economists expected. The number remains relatively low compared with history, but it still hit its highest level in eight months.

The data came as Procter & Gamble, the giant behind such brands as Pampers diapers and Cascade dish detergent, said it will cut up to 7,000 jobs over the next two years. Its stock fell 1.9%.

The day’s heaviest weight on the market was Tesla, which tumbled 14.3%. It’s lost nearly 30% of its value so far this year as CEO Elon Musk’s relationship with Trump sours amid a disagreement over the president’s signature bill of tax cuts and spending.

Brown-Forman, the company behind Jack Daniel’s and Woodford Reserve, dropped 17.9% for its worst day since it began trading in 1972.

Its profit and revenue for the latest quarter fell short of Wall Street’s expectations, and the company said it expects its upcoming fiscal year to be challenging because of “consumer uncertainty, the potential impact from currently unknown tariffs” and other things.

The CEO of PVH, which runs the Calvin Klein and Tommy Hilfiger brands, likewise cited challenges from “an increasingly uncertain consumer and macroeconomic backdrop.”

Its stock fell 18% even though it reported stronger revenue and profit for the latest quarter than analysts expected. The company cut its profit forecast for its full fiscal year, saying it will likely be able to offset only some of the potential hit it will take because of tariffs.

Hopes that Trump will lower his tariffs after reaching trade deals with other countries have been among the main reasons the S&P 500 has rallied back so furiously since dropping roughly 20% from its record two months ago. It’s now back within 3.3% of its all-time high.

Trump boosted such hopes Thursday after saying he had “a very good phone call” with China’s leader, Xi Jinping, about trade and that “their respective teams will be meeting shortly at a location to be determined.”

It’s an easing of tensions after the world’s two largest economies had earlier accused each other of violating the agreement that had paused their stiff tariffs against each other, which threatened to drag the economy into a recession.

To be sure, nothing is assured amid Trump’s on-and-off rollout of tariffs, and markets took the latest detente with China relatively coolly.

Among Wall Street’s winners was MongoDB, which jumped 12.8% after the database company likewise delivered a stronger profit than analysts expected.

Circle Internet Group, the U.S.-based issuer of one of the most popular cryptocurrencies, surged 168.5% in its first day of trading on the New York Stock Exchange.

Five Below climbed 5.6% after the retailer, which sells products priced between $1 and $5, reported a stronger profit for the latest quarter than analysts expected. CEO Winnie Park credited broad-based strength across most of its merchandise All told, the S&P 500 fell 31.51 points to 5,939.30. The Dow Jones Industrial Average dropped 108.00 to 42,319.74, and the Nasdaq composite sank 162.04 to 19,298.45.

In the bond market, Treasury yields held steadier. The yield on the 10-year Treasury rose to 4.40% from 4.37% late Wednesday after tumbling from 4.46% the day

before. Yields dropped so sharply on Wednesday as expectations built that the Federal Reserve will need to cut interest rates later this year to prop up an economy potentially weakened by tariffs.

In stock markets abroad, indexes in Europe were mixed amid modest moves after the European Central Bank cut its main interest rate again, as was widely expected.

The moves were bigger in Asia, where South Korea’s Kospi jumped 1.5% after the country’s new president and leading liberal politician Lee Jae-myung began his term, vowing to restart talks with North Korea and beef up a partnership with the U.S. and Japan.