By Anora Mahmudova, MarketWatch

NEW YORK (MarketWatch) -- The U.S. stock market was broadly lower on Thursday following government reports on jobless claims and retail sales that came in softer than expected.

A jump in oil prices stemming from an armed conflict in Iraq boosted the energy sector on the S&P 500.

Weekly jobless claims ticked up, while the forecast was for applications to drop slightly. Retail sales in May rose by less than forecast, however, the increase in April was revised sharply upward.

The S&P 500 (SPX) was 4 points, or 0.2%, lower at 1,940.41. The Dow Jones Industrial Average (DJI) dropped 27 points, or 0.2%, to 16,817.33. The Nasdaq Composite (RIXF) shed 16 points, or 0.4%, to 4,315.58.

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In economic news, the number of Americans who applied for unemployment benefits last week increased slightly but remained near a post-recession bottom, indicating little change in a gradually improving U.S. labor market.

Sales at U.S. retailers rose last month on strong demand for cars, trucks and home-improvement products, but spending tapered off at many other retailers after a big bump in demand in April.

Taken together, sales in April and May reflect an economy growing at a fairly brisk pace in the spring after the U.S. suffered a sharp contraction in the first quarter. Retail sales account for about one-third of consumer spending, the main engine of U.S. economic activity.

In corporate news, shares of Lululemon Athletica Inc. (LULU) slumped 14% after the maker of high-end yoga gear lowered its outlook for the year and reported a drop in profit for the first quarter.

Restoration Hardware Holdings Inc. (RH) rallied 13% after the upscale home-furnishing retailer late Wednesday reported it swung to first-quarter profit from a loss a year ago.

Land's End Inc. (LE) shares surged 12% after the retailer said profit rose nearly 50% in its first quarter as an independent company after being spun off from Sears Holdings Corp. (SHLD)

Airline companies that were hit badly on Wednesday, continued to sell off. Delta Air Lines, Inc (DAL) fell 5.6%, making it the worst performing stock on the S&P 500. Southwest Airlines Co. (LUV) fell 4.5%, Americal Airlines Group, Inc. (AAL) lost 5.5%.

Energy companies, which tend to react to price swings in oil, rallied on Thursday. Denbury Resources Inc (DNR) was up 2.6%, Chesapeake Energy Corporation (CHK) rose 2%.

In other financial markets, Asian stocks closed mostly lower, while European equities were mixed. Gold (GCQ4) inched higher, while the dollar was broadly unchanged.

Oil futures were also impacted by the tensions in the Middle East, where Iraqi militants reportedly took full control of the northern oil city of Kirkuk and moved closer to the capital, Baghdad.

The July contract for Brent crude rose 1.9%, while West Texas Intermediate crude for the same month (CLN4) traded 1.6% higher at $105.97 a barrel.

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