NEW YORK – U.S. stocks finished lower on Thursday, folding after a four-session winning streak, with Wall Street wary ahead of the next day’s monthly jobs report.

Stocks resumed their decline after briefly rallying as weekly jobless claims fell and a gauge of manufacturing came in better than feared, lessening concerns about the direction of the economy.

After climbing 103 points and falling as much as 125 points, the Dow Jones industrial average closed 119.96 points lower at 11,493.57.

“Uncertainty plus shortsighted trading has promoted the market volatility,” said David Pankiw, partner at Cubic Financial Advisors.

The Standard & Poor’s 500 index fell 14.47 points to end at 1,204.42, with financials hardest hit and consumer staples faring best among its 10 industry sectors.

The Nasdaq composite declined 33.42 points to close at 2,546.04.

All three indexes advanced on Wednesday, the final trading session for August, with the S&P 500 down 6 percent for the month, the worst since the ‘flash-crash’ induced decline in May 2010 and worst August in a decade.

“Market valuations, such as the P/E ratio, fell to the lowest levels only seen during bear market bottoms,” according to Marc Pado, U.S. market strategist at Cantor Fitzgerald.

The market saw mixed reactions to Thursday’s economic news. The Institute for Supply Management’s factor index fell to 50.6 in August from 50.9 the prior month.

“While I agree with the slowdown, this economy has legs – after the negative month of August, the ISM number held firm,” said Pankiw. “Keep in mind that we are still coming off of the Japan tsunami. … Add in our own U.S. disasters, plus the tug of war in Washington, and you can confirm the results.”

Separately, the Labor Department reported applications for initial unemployment benefits last week fell by 12,000 to 409,000.

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