The Dow Jones Industrial Average which was negative for most of the session, spiked lower in the final hour of trading. The blue-chip index finished down 76 points, or 0.7%, at 10,662. The S&P 500 slid 9 points, or 0.8%, to 1,125, dipping back below the key technical level of 1,130. The Nasdaq, which had been up the majority of the day, also succumbed to the selling pressure, losing 7 points, or 0.3%, to close at 2,327.
From a sector standpoint, financials, transportation and capital goods stocks were among the worst hit. Overall market breadth on the New York Stock exchange was also very negative with decliners outnumbering advancers by a 7-2 ratio.
The session started out ugly as European equities markets were in broad decline after a survey of purchasing managers in the eurozone came in at 53.8, down from 56.2 in August. Ireland's economy also contracted, adding to concerns about Europe's economic recovery.
The FTSE in London lost 0.9%, and the DAX in Frankfurt was shed 0.4%. It was a quiet day for Asian markets, with Hong Kong's Hang Seng and Japan's Nikkei closed for holidays.
Then before the opening bell, the Labor Department said initial weekly jobless claims rose by 12,000 to 465,000 in the week ended Sept. 18, exceeding the 450,000 claims that economists had been expecting, according to Briefing.com.
"The 10-year average for unemployment claims is 393,000 and that included a period when we had a real estate boom. We are still about 70,000 above that average," Michael Pento, senior economist at Euro Pacific Capital, told TheStreet."Even though the so-called recession has ended, there is no job growth," said Pento, pointing out that even though layoffs may be slowing, companies were still not hiring.
Jay Suskind, senior vice president at Duncan Williams, said the morning's economic reports were pretty benign."Jobs data didn't suggest any type of rebound, reinforcing expectations for moderate GDP growth of 1% to 2%. Labor and housing are the two areas that are keeping the economy from improving so until there's a turnaround, the economy will continue to chug along."
In an interview that appeared early Thursday morning on CNBC's Squawk Box, legendary investor Warren Buffet said that the U.S. economy was still in a recession. "On any common sense definition, if the average American is below where he was before, or his family, in terms of real income, GDP, we're still in a recession. And-- and we're not gonna be out of it for awhile, but we will get out of it," Buffett told CNBC.
Still, stocks are still higher for the month. "It has been a good month and we're nearing the end of the third quarter so you'll start to get a level of cleaning up positions," Suskind said, adding that the focus will start to shift to earnings.
"Even though the economy is growing slowly, I think the fear of a double-dip is pretty much off of the table now. I think the S&P 500 hitting 1130 was a crucial mark and you get a sense that the market wants to move higher. However, I think it'll continue to stay within, and possibly on the upper end, of this trading range until the elections."
Elsewhere in commodity markets, the December gold contract settled higher by $4.2, at $1,296.30 an ounce.
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