Print this Story
NEW YORK – Stocks tumbled Thursday as downbeat news about the nation's job market and rising debt in Europe revived fears of a global economic slowdown.
Major indexes slid more than 1 percent, including the Dow Jones industrial average, which fell 165 points. All 30 stocks that make up the Dow dropped. Treasury prices jumped as investors sought safe havens.
Disappointing reports on jobless claims in the U.S. and economic sentiment in Europe painted a bleaker picture of a recovery than Federal Reserve Chairman Ben Bernanke did during testimony Wednesday on Capitol Hill.
Overseas markets fell after the European Commission said economic sentiment in the 16 countries that use the euro worsened unexpectedly in February. Concerns that Greece will struggle to cut its budget and get its debt problems under control are again worrying investors.
Trading in the U.S. has been choppy in recent weeks because of uneasiness about the economy. And global markets retreated earlier this month because traders were worried Greece's debt problems would spread to other European countries.
The euro again fell, touching a nine-month low against the dollar.
Meanwhile, the Labor Department said first-time claims for unemployment insurance rose by 22,000 to a seasonally adjusted 496,000. Economists polled by Thomson Reuters had forecast a drop in claims to 455,000.
It is the second straight week that claims jumped unexpectedly. High unemployment remains one of the biggest obstacles to a sustained economic recovery. The Labor Department's monthly report on employment will be released next week.
"We're getting hit with a double punch here today," said Jeffrey Phillips, chief investment office of Rehmann in Troy, Mich. The euro is again weaker because of debt concerns and the weekly jobless claims report are adding to volatility, he said.
Phillips expects trading to remain erratic if investors get more mixed signals about the economy. The Chicago Board Options Exchange's Volatility Index, which is known as the market's fear gauge, jumped 10.8 percent in morning trading. A rise in the VIX signals that investors are expecting swings in the market.
In midmorning trading, the Dow fell 166.34, or 1.6 percent, to 10,207.82. The Standard & Poor's 500 index dropped 16.67, or 1.5 percent, to 1,088.57, while the Nasdaq composite index fell 33.22, or 1.5 percent, to 2,202.68.
Bond prices rose, pushing yields lower. The yield on the benchmark 10-year Treasury note fell to 3.65 percent from 3.70 percent late Wednesday.
Gold and oil prices fell.
Investors will also pay attention to a meeting of Congressional leaders and President Barack Obama to discuss changes to health care. The White House is trying to push through an overhaul that would extend coverage to more than 30 million people who are now uninsured.
Meanwhile, the Commerce Department had mixed news about manufacturing. Durable goods orders rose 3 percent in January because of a jump in commercial aircraft orders. It was the biggest increase in six months for orders of goods that are expected to last at least three years.
However, orders fell by 0.6 excluding volatile transportation orders. Economists expected those orders to rise 1 percent.
In corporate news, The Coca-Cola Co. said it will buy the North American operations of its largest bottler, Coca-Cola Enterprises, and will give up its own bottling operations in Sweden and Norway.
Shares of Coca-Cola Enterprises jumped $6.15, or 32.1 percent, to $25.33, while Coca-Cola Co. shares fell $2.04, or 3.7 percent, to $53.12.
Stocks broke a two-day losing streak on Wednesday after investors received the reassurance they wanted from Bernanke. During semiannual testimony before Congress, Bernanke reaffirmed the Fed's plans to keep interest rates low to help strengthen the economy. He testifies again Thursday. The Dow rose 92 points.
Bernanke's testimony overshadowed a disappointing report on new home sales. The Commerce Department said sales of new homes fell to a record low in January. A collapse in sales and home prices help drive the economy into recession. Recent reports show a recovery in the housing market remains choppy.
At the New York Stock Exchange, 2,377 stocks fell, while only 386 rose. Volume came to 164.4 million shares compared with 138.5 million shares.
The Russell 2000 index of smaller companies fell 8.37, or 1.3 percent, to 622.06.
In afternoon trading, Britain's FTSE 100 fell 1.4 percent, Germany's DAX index dropped 1.4 percent, and France's CAC-40 fell 2 percent. Earlier, Japan's Nikkei stock average fell 1 percent.
