Wall Street declined on Thursday after a Federal Reserve official made cautious comments on the U.S. economy.

The market was higher at the open on Thursday after data from the Labor Department showed the number of people filling for jobless benefits dropped by 11,000 to 457,000 in the week ended July 24, basically in line with market expectation.

The drop in initial claims suggests the layoffs may be easing, but the level of claims still indicated that the labor market will be slow to recover as employers are still reluctant to hire.

Market sentiment was also boosted earlier by the latest string of strong corporate earnings and economic data from across the globe.

Most notably, data from Europe showed the recovery in the continent was stronger than economists’ expectation, easing some concerns that the slowdown in Europe will put the global growth in jeopardy.

However, markets dipped after James Bullard, president of the Federal Reserve Bank of St. Louis, said he worried that the United States could tip into a Japanese-like bout of deflation if the economy weakens.

In a paper released on Thursday, Bullard also argued that the Fed’s pledge to hold rates at record lows for an extended period is a “double-edged sword.” The pledge could make investors, businesses and ordinary people think inflation could be heading lower, which could aggravate the risk of deflation.

The Dow Jones industrial average fell 31.25 points, or 0.30 percent, to 10,466.63. The Standard & Poor’s 500 index dropped 4. 60 points, or 0.42 percent, to 1,101.53 and the Nasdaq was down 12. 87 points, or 0.57 percent, to 2,251.69.

The U.S. dollar slid to its lowest level against the euro in 12 weeks on Thursday amid mounting concerns about the U.S. economy at a time when European indicators are improving.

The euro once climbed to trade at 1.3106 U.S. dollars, its highest level since May 4. In late New York trading, the euro bought 1.3079 dollars, up from 1.2980 dollars late Wednesday.

Oil prices rose as the dollar weakened against the euro, boosting demand for the oil priced in dollars. Light, sweet crude for September delivery rose 1.37 dollars to settle at 78.36 dollars a barrel. In London, ICE Brent rose 1.53 dollars to 77.59 dollars a barrel.