NEW YORK — Wall Street proceeded cautiously Thursday, with stocks trading slightly lower as investors were mindful of corporate earnings reports that signaled further economic deterioration, but drew some comfort from a better-than-expected reading on unemployment.

The Labor Department provided the market with a small dose of relief, reporting that initial jobless claims fell by more than economists anticipated to 554,000 last week. The claims remain near last week's 26-year high, and the four-week moving average for claims is up, but investors had been bracing for a gloomier reading.

The economy's troubles are far from over, and the market remains unsure how steep and prolonged the recession will be.

A batch of mixed corporate earnings reports on Thursday kept investors on edge.

FedEx Corp. reported a 3 percent rise in quarterly earnings, but announced further cost cuts as demand continues to wane; Discover Financial Services swung to a profit; and homebuilder Lennar Corp.'s quarterly loss was smaller than last year's. Ingersoll-Rand Co., however, cut its fourth quarter earnings forecast by more than half, and motor home maker Winnebago Industries Inc. swung to a loss.

Meanwhile, President-elect Barack Obama's aides were assembling a two-year stimulus plan that could cost $850 billion. The package would include new jobs, middle-class tax relief and expanded aid for the poor and the unemployed.

A stimulus for U.S. consumers became an especially high priority earlier this month, when the Labor Department reported that U.S. employers slashed more than half a million jobs in November.

In the first hour of trading, the Dow Jones industrial average fell 30.90, or 0.35 percent, to 8,793.44. Broader stock indexes also declined moderately. The Standard & Poor's 500 index dipped 1.12, or 0.12 percent, to 903.30, while the Nasdaq composite index fell 3.35, or 0.21, to 1,575.96.