Mixed economic news fails to revive stock market
Stocks tumble anew on concerns Greece bailout won't stem losses; jobless claims disappoint
NEW YORK (AP) -- Stocks extended their slide into a third day Thursday after news on the U.S. job market failed to ease worries that Greece's debt woes would spread.
The Dow Jones industrial average fell about 215 points in afternoon trading. The Dow and broader indexes dropped more than 2 percent. The Dow had already fallen 284 points in the prior two days. Treasury prices rose on increased demand for safe government debt.
The euro fell further against the dollar, hitting a new 14-month low. The euro has tumbled against the dollar since last fall as faith in Europe's shared currency dwindles. Greece's debt crunch is widely seen as a test of Europe's ability to restore fiscal discipline to the weak economies in its union and keep the decade-old currency viable.
"It's going to drop further," Tim Speiss, chairman of the personal wealth advisers practice at Eisner LLP in New York, said of the euro.
The dollar's rise pushed commodities prices lower, especially oil. That sent prices of oil companies like ExxonMobil and Chevron lower.
Greece passed a bill in its Parliament after heated debate that calls for unpopular cuts in public spending in pensions and other areas, as well as tax increases. Greece needed to approve the austerity measures to be eligible to receive a $141.9 billion aid package from the International Monetary Fund and the 15 other countries that use the euro.
Greece needs access to an initial portion of the money by May 19 to cover $11.6 billion in debt payments, or it likely will default.
Even if Greece gets the money, there are still worries that the loans would be only a temporary fix to a growing debt problem across the continent. Portugal and Spain have also seen their debt ratings downgraded.
In economic news, the Labor Department said new claims for jobless benefits fell lass than expected last week. It also said productivity rose more than forecast in the first quarter, but that was due in part to a drop in labor costs, which is a negative signal for consumer spending. The report comes a day ahead of the government's April jobs report. It is widely seen as the most important economic report.
In midafternoon trading, the Dow fell 214.63, or 2 percent, to 10,653.49. The Standard & Poor's 500 index fell 27.87, or 2.4 percent, to 1,138.03, while the Nasdaq composite index fell 64.17, or 2.7 percent, to 2,338.12.
Treasury prices rose, pushing interest rates down in the bond market. The yield on the benchmark 10-year Treasury note fell to 3.44 percent from 3.54 percent late Wednesday.
Crude oil fell $2.81 to $77.16 per barrel on the New York Mercantile Exchange.
The Labor Department's weekly report on initial jobless claims showed 444,000 workers applied for unemployment benefits last week. That's down from a week earlier, but fell short of the 440,000 estimated by economists polled by Thomson Reuters.
It was the third straight weekly drop in new claims, but economists say claims have not yet fallen to levels that would indicate consistent job growth. Initial claims would have to dip to around 425,000 to signal employers are adding jobs. High unemployment remains one of the key issues facing the U.S. economy.
"Even though we didn't hit a home run with it, we hit a single," Larry Rosenthal, president of Financial Planning Services in Manassas, Va., said of the report. "This a process we have to work through. This is a long-term recovery."
The weekly claims report comes a day before the Labor Department is expected to say the unemployment rate remained at 9.7 percent in April. An improving employment picture could boost consumer sentiment and make people more optimistic about a recovery.
"It's a whole lot easier to be confident when you have a job," said Bryan Hopkins, president of Hopkins Wealth Management Group in Anaheim Hills, Calif.
A separate Labor Department report showed first-quarter productivity rose at an annual rate of 3.6 percent, better than the 2.5 percent forecast by economists. The gain was due in part to a drop in labor costs, which means companies should be able to maintain strong profit margins. However, it also means that consumers' incomes continue to be squeezed, which could slow a rebound in spending.
That slow recovery in spending was seen as retailers provided a mixed picture for April sales. Sales largely slowed from March's strong pace, partly because Easter was earlier this year. Macy's Inc. was among the retailers that topped forecasts, but its shares still slid. Gap Inc. and Target Corp. fell sharply after reporting disappointing monthly sales results.
Macy's shares fell 61 cents, or 2.6 percent, to $22.61. Gap fell $1.20, or 4.9 percent, to $23.48, while Target dropped 51 cents, or 0.9 percent, to $55.80.
In energy stocks, Exxon Mobil Corp. fell 94 cents, or 1.4 percent, to $65.23, and Chevron fell $1.55, or 1.9 percent, to $78.64.
About 10 stocks fell for every one that rose on the New York Stock Exchange, where volume came to 1 billion shares, compared with 916.2 million shares traded at the same point Wednesday.
The Russell 2000 index of smaller companies fell 9.34, or 1.3 percent, to 689.24.
Overseas, Britain's FTSE 100 fell 1.5 percent, Germany's DAX index fell 0.8 percent and France's CAC-40 dropped 2 percent. Japan's Nikkei stock average, which had been closed the past three days for holidays, fell 3.3 percent.
