Job worries hurt stocks at start of 3rd quarter

ob worries hurt stocks at start of 3rd quarter

Stocks drop after weaker reports on jobs, manufacturing; Pending home sales fall to record low

NEW YORK (AP) -- Stocks have begun the third quarter with more selling after disappointing reports on jobs, housing and manufacturing deepened concerns about the economy.

The weaker reports Thursday follow a bad second quarter for investors and come a day ahead of the government's June jobs report.

The government says initial claims for jobless benefits rose by 13,000 last week to 472,000. Economists had forecast claims would fall.

Trade groups report that the number of buyers who signed contracts to purchase homes fell to a new low in May and that manufacturing slipped in June.

At midday, The Dow Jones industrials are down 94 at 9,680. The Standard & Poor's 500 index is down 11 at 1,020, while the Nasdaq composite index is down 22 at 2,088.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

NEW YORK (AP) -- Stocks began the third quarter with more selling after disappointing reports on jobs, housing and manufacturing deepened concerns about the economy.

The Dow Jones industrial average fell about 120 points in morning trading Thursday. The Dow and other major indexes lost more than 1 percent. Interest rates fell in the bond market as demand for Treasurys grew.

The weaker reports followed a bad second quarter for investors and came a day ahead of the government's June jobs report. That's an important date on investors' calendars because a rebound in jobs is needed for the economy to recover.

The government said initial claims for jobless benefits rose by 13,000 last week to 472,000. Economists had forecast claims would fall. That comes a day after payroll company ADP said private employers didn't ramp up hiring as much as expected last month.

Initial claims have remained well above the levels economists believe would indicate strong jobs growth. Many employers remain reluctant to hire because of worries about the pace of the economic recovery.

The market extended its early drop after the National Association of Realtors said the number of buyers who signed contracts to purchase homes fell to a new low in May following a rush of purchases to meet an April 30 tax credit deadline.

The Institute for Supply Management, an industry trade group, said its manufacturing index fell in June but that the sector still appears to be growing. The drop from May was steeper than analysts had expected.

John Canally, economist at LPL Financial in Boston, said traders were so scarred by the market's crash in 2008-09 that they see a slowdown as a sign that the economy is going to falter again rather than just slow as the recovery continues.

"You see this almost every time 12-15 months after the end of a recession. You hit sort of a soft spot," Cannaly said.

In late morning trading, the Dow fell 119.48, or 1.2 percent, to 9,654.54. The broader Standard & Poor's 500 index fell 15.92, or 1.5 percent, to 1,014.79, and the Nasdaq composite index fell 34.52, or 1.6 percent, to 2,074.72.

The Dow fell 10 percent for the April-June quarter, while the S&P 500 index fell 11.9 percent.

With the market so unsettled, investors are giving up potential big gains in stocks and opting for the smaller but safer gains that can be made in bonds.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.89 percent from 2.94 percent late Wednesday. Its yield fell below 3 percent this week for the first time in more than a year, a sign bond investors are concerned the economy could slip back into recession.

About five stocks fell for every one that rose on the New York Stock Exchange, where volume came to 477 million shares compared with 338 million traded at the same point Wednesday.

The Russell 2000 index of smaller companies fell 15.93, or 2.6 percent, to 593.56.

Overseas, Britain's FTSE 100 dropped 2.4 percent, Germany's DAX index fell 2 percent, and France's CAC-40 lost 3.4 percent. Japan's Nikkei stock average fell 2 percent.

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