By Anora Mahmudova, MarketWatch

NEW YORK (MarketWatch) -- The U.S. stock market extended losses on Thursday following softer-than-expected economic data and nervousness around surging oil prices.

As unrest in Iraq intensified, concerns over supply sent crude oil prices soaring. Softer-than-expected economic data weighed on sentiment. Weekly jobless claims ticked up, rather than the slight drop that was expected. Retail sales in May rose by less than forecast; however, the increase in April was revised sharply upward.

The S&P 500 (SPX) was 14 points, or 0.7%, lower at 1,93.0.02. The Dow Jones Industrial Average (DJI) dropped 100 points, or 0.6%, to 16,741.32. The Nasdaq Composite (RIXF) shed 39 points, or 0.9%, to 4,293.46.

Follow MarketWatch's live blog of today's stock-market action.

Joe Peta, managing director at Novus, a financial technology company, said that economic data, even when it meets expectations, is not good enough.

"Wall Street's expectations for growth acceleration in the second half of the year are too optimistic and we are just not seeing that in data so far," Peta said.

The number of Americans who applied for unemployment benefits last week increased slightly but remained near a post-recession bottom, indicating little change in a gradually improving U.S. labormarket.

Sales at U.S. retailers rose last month on strong demand for cars, trucks and home-improvement products, but spending tapered off at many other retailers after a big bump in demand in April.

In corporate news, shares of Lululemon Athletica Inc. (LULU) slumped 16% after the maker of high-end yoga gear lowered its outlook for the year and reported a drop in profit for the first quarter.

Restoration Hardware Holdings Inc. (RH) rallied 13% after the upscale home-furnishing retailer late Wednesday reported it swung to first-quarter profit from a loss a year ago.

Land's End Inc. (LE) shares surged 13% after the retailer said profit rose nearly 50% in its first quarter as an independent company after being spun off from Sears Holdings Corp. (SHLD)

Shares in airline companies, hit badly on Wednesday following a profit warning from Deutsche Lufthansa AG, tumbled again on Thursday because of higher oil prices. Delta Air Lines, Inc(DAL) dropped 5.9%, making it the worst performing stock on the S&P 500. Southwest Airlines Co. (LUV) fell 5%, American Airlines Group, Inc. (AAL) lost 7.2%.

Energy companies, which also tend to react to price swings in oil, rallied on Thursday. Denbury Resources Inc (DNR) was up 1.5%, Chesapeake Energy Corporation (CHK) rose 1.6%.

In other financial markets, Asian stocks closed mostly lower, while European equities were mixed. Gold (GCQ4) inched higher, while the dollar was broadly unchanged.

Oil futures climbed as Iraqi militants reportedly took full control of the northern oil city of Kirkuk and moved closer to the capital, Baghdad. The July contract for Brent crude rose 2.3%, while West Texas Intermediate crude for the same month (CLN4) traded 1.8% higher at $106.24 a barrel.

More must-reads from MarketWatch:

5 things you need to know about Iraq right now

Is this the perfect investment portfolio?

6 innovations makingtheir debut at the World Cup

Subscribe to WSJ:

(END) Dow Jones Newswires

June 12, 2014 14:37 ET (18:37 GMT)

Copyright (c) 2014 Dow Jones & Company, Inc.