Stocks had edged higher in the morning after a report from the Labor Department showed that first time claims for unemployment benefits dropped last week to the second-lowest level this year. Claims fell to 421,000, below the 428,000 figure that Wall Street expected.

The four-week average of claims also slid for the fifth straight week, reaching the lowest level since August 2008, before the darkest days of the financial crisis.

The Standard and amp; Poor’s 500 index is inching up, a day after setting a closing high for 2010. The index rose 0.4, or 0.03 percent, to 1228.70. The Dow Jones industrial average fell 25 points, or 0.2 percent, to 11,346.63. The Nasdaq composite index rose 3, or 0.1 percent, to 2,611.91.

Of the 30 stocks in the Dow, 17 fell. The index’s laggard is DuPont. The chemical maker’s shares are down 1.7 percent after it forecast earnings and sales for next year at the low end of analysts’ expectations.

Treasurys prices are slightly higher, causing their yields to drop after getting crushed for two days straight. The yield on the 10-year note slipped to 3.24 percent. The yield, which help set rates for a wide variety of loans, reached as high as 3.33 percent Wednesday, the highest level in nearly six months.

Higher rates in the Treasury market have helped lift the dollar against the Japanese yen and the euro. The dollar index rose 0.3 percent against an index of six other major currencies.

President Barack Obama’s compromise with Republicans to let all Americans keep Bush-era tax cuts for two years has helped push Treasurys lower and stocks higher this week.

The S and amp;P 500 index closed at a new yearly high of 1,228.28 on Wednesday. It reached its last high on Nov. 5.

The plan still needs approval from Congress. The White House has been pushing Democrats to back the measure, arguing that a defeat could knock the economy back into recession. It also contains a provision extending unemployment benefits. Several Democrats predicted the compromise would pass with widespread Republican support, although House Democrats voted to reject the deal in its current form.

Economists expect the tax package to boost the US economy and are already raising their estimates for economic growth next year as a result. Goldman Sachs’s rough estimate is that the tax proposal could add between 0.5 and 1 percentage point to economic growth in 2011. A stronger economy diminishes the appeal of ultra-safe investments like Treasurys and raises the prospect of higher inflation.

The change in inflation expectations could make for a messy Treasury auction Thursday afternoon, when the government plans to sell $13 billion in 30-year Treasurys, currently paying 4.42 percent. Investors like the higher yields, but 30-year bonds would get hit the hardest if inflation picks up.