Stocks fell in morning trading Thursday and bond yields hit a low for the year after disappointing reports about the U.S. jobs market and economic growth.

The Labor Department said more people applied for unemployment benefits last week, the first increase in three weeks. The number of people seeking benefits rose by 10,000 to 424,000, more than analysts were expecting.

Applications are above the 375,000 level that indicates sustainable job growth. Applications peaked at 659,000 during the recession. Employers stepped up hiring this spring, but some economists worry that rising applications indicate a slowdown in hiring.

The Commerce Department said the economy grew at a sluggish 1.8 percent in the January-March quarter as surging gasoline prices and sharp cutbacks in government spending overshadowed strong corporate earnings. Consumer spending grew at just half the rate of the previous quarter, and less than previously estimated. A surge in imports widened the U.S. trade deficit.

In early trading, the Dow Jones industrial average fell 68 points, or 0.6 percent, to 12,326. The Standard & Poor's 500 fell 5, or 0.4 percent, to 1,315. The Nasdaq composite dropped 4, or 0.1 percent, to 2,759.

The weak economic news drew investors toward safer assets, pushing the yield on the 10-year Treasury note to 3.08 percent, its lowest level this year. It was trading at 3.15 percent shortly before the economic reports came out. Bond yields fall when their prices rise.

More people applied for unemployment benefits last week, the first increase in three weeks and evidence that the job market is still sluggish.

The number of people seeking benefits rose by 10,000 to a seasonally adjusted 424,000, the Labor Department said Thursday. No states cited extreme weather as a factor in the increase, a department spokesman said. Tornadoes and floods have devastated several states in the Midwest and South in the past month.

Applications are above the 375,000 level that is consistent with sustainable job growth. Applications peaked at 659,000 during the recession.

"The job market isn't exactly improving with leaps and bounds," Jennifer Lee, an economist at BMO Capital Markets, said in a note to clients. "Businesses are hiring but are likely holding back until they're more comfortable and confident with the current economic environment."

Still, the four week average, a less volatile measure, declined for the first time in seven weeks to 438,500.

Employers stepped up hiring this spring, but some economists worry that rising applications indicate hiring is slowing.

A separate report showed that the economy grew 1.8 percent in the January-March quarter, a slowdown from the 3.1 percent annual pace recorded in the October-December period. Consumer spending grew at a much slower pace, as shoppers were held back by high unemployment and $4 a gallon gas.

A regulatory filing shows that 3M Co. chief executive George Buckley plans to sell almost one-third of his company stock, worth more than $33 million.

The prearranged plan would have Buckley sell about 350,000 shares of 3M common stock over the next two months. The shares were acquired through stock-option exercises and will be sold in accordance with minimum price thresholds.

The plan was described in a Wednesday filing with the U.S. Securities and Exchange Commission.

Shares of 3M were up 39 cents, or 0.4 percent, to $94.33 in morning trading Thursday.

Buckley became CEO of the St. Paul-based company five years ago. In February he will turn 65, which is 3M's mandatory retirement age.

Conflicting signs about the economic recovery caused stock indexes to pare early gains Thursday even after LinkedIn became the biggest Internet IPO since Google went public in 2004.

Stocks opened higher after the Department of Labor reported that applications for unemployment dropped 29,000 last week, more than expected, to 409,000. Indexes gave up those early gains after three negative reports on the economy came out at midmorning.

The Dow Jones industrial average rose 23 points, or 0.2 percent, to 12,583 in midday trading. The Standard & Poor's 500 index edged up 1, or 0.1 percent, to 1,342. The Nasdaq composite index added 5, or 0.2 percent, to 2,820.

The National Association of Realtors said fewer people purchased previously occupied homes in April. The Conference Board's outlook for future economic activity decreased for the first time since June 2010. And the Philadelphia Federal Reserve said that its measure of manufacturing activity slumped to its lowest reading since October.

The mixed news confirmed investors' belief that economic growth could be slow in the coming months. The yield on the benchmark 10-year Treasury note had risen as high as 3.24 percent following the positive jobs news but was back down to 3.20 percent in afternoon trading, slightly above the 3.18 percent rate it was trading at late Wednesday. Bond yields tend to rise when investors anticipate stronger economic growth.