By ALEXANDRA SCAGGS

Stocks took a breather at the finish of a monthlong sprint higher, but the blue chips still marked their best January since 1994.

The Dow Jones Industrial Average fell 49.84 points, or 0.4%, to 13860.58 on Thursday. But the index climbed 5.8% for the month, its best since October 2011. The Standard & Poor's 500-stock index declined 3.85 points, or 0.3%, to 1498.11, but climbed 5% on the month, its strongest start since 1997.

Do January's markets performance signal what's to come for the rest of the year? WSJ's Jonathan Cheng reports on the News Hub.

The Nasdaq Composite Index lost 0.18 point, or less than 0.1%, to 3142.13.

"There's this realization that maybe the market's ahead of itself," said Marc Doss, regional chief investment officer with Wells Fargo Wealth Management, which oversees $169 billion. "It's kind of a reality check."

Investors weighed a mixed bag of economic data. The reports followed a preliminary reading on Wednesday that showed surprise contraction in the U.S. economy and served as a prelude to the government's employment report due Friday.

"We need to see sufficient signs that the global economy is motoring along relatively well," said Andrew Milligan, head of global strategy at Standard Life Investments (SL.LN), which oversees $263 billion.

In Thursday's economic data, the Chicago-area purchasing managers' index for January rose further into expansion territory than expected. Personal income rose more than expected in December, but the gain was driven by a big jump in dividend income, as companies sped up dividend payments to avoid tax increases in 2013.

Initial claims for jobless benefits in the latest week were higher than expected. Personal spending increased and was in line with economists' expectations.

Meanwhile, TrimTabs Investment Research said $78 billion flowed into stock mutual funds and exchange-traded funds in January, the biggest monthly total since at least 2000.

In corporate earnings news, Facebook (FB) declined 26 cents, or 0.8%, to $30.98, after the social-networking firm reported earnings and revenue that topped analysts' estimates, but its operating margin narrowed and costs surged on the year. The stock received at least four analyst downgrades.

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UPS dropped 2.4% as earnings fell short of analyst expectations. Above, delivering packages in San Francisco last December.

UPS (UPS) fell 1.94, or 2.4%, to 79.29, after the package-delivery company reported earnings that fell short of expectations amid disappointing consumer spending for holiday shopping. It also provided a full-year outlook that was below projections.

European markets pulled back, with the Stoxx Europe 600 losing 0.5% following an unexpected drop in German retail sales. The index rose 2.7% on the month. Germany's DAX index declined 0.5% but advanced 2.1% in January. The U.K.'s FTSE 100 index dropped 0.7% but finished January up 6.4%, its best month since October 2011.

In Asia, Japanese stocks finished off a strong month on a bright note amid broad gains in the banking sector. Japan's Nikkei Stock Average rose 0.2% on the day, and climbed 7.2% on the month, to the highest level since October 2008.

Crude-oil prices slipped 0.5%, to settle at $97.49 a barrel, while gold dropped 1.1%, to settle at $1,660.60 a troy ounce. The dollar lost ground against the euro and gained against the yen. The yield on the 10-year Treasury note rose to 1.987% as prices fell.

In corporate news, Qualcomm (QCOM) climbed 2.49, or 3.9%, to 66.02, after the semiconductor maker beat both earnings and revenue estimates for its fiscal first-quarter and provided an upbeat outlook for the current quarter.

Nasdaq OMX Group (NDAQ) advanced 35 cents, or 1.2%, to 28.32. The exchange forecast higher expenses than expected while reporting earnings and revenue that topped estimates. The shares were upgraded by an analyst with Raymond James & Associates.

MasterCard (MA) gained 2.40, or 0.5%, to 518.40, after the payment-processing company reported earnings and revenue that exceeded analyst expectations.

Blackstone Group (BX) rallied 1.06, or 6.1% to 18.50, as the private-equity firm beat Wall Street estimates in its latest earnings report, recording growth in its performance and management fees.

Research In Motion (RIMM) pulled back for a second day, down 80 cents, or 5.8%, to 12.98, following the launch of its BlackBerry 10 smartphone. The first of the devices won't be available in the U.S. until mid-March.

Citrix Systems (CTXS) surged 6.18, or 9.2%, to 73.16, after the software maker reported earnings and revenue that were well above expectations and provided a full-year revenue outlook that was above projections.

Write to Alexandra Scaggs at alexandra.scaggs@dowjones.com