Worries over persistent job losses pound stocks
NEW YORK -- Another bad signal from the job market and concern over a possible downgrade of British government debt sent stocks sharply lower Thursday.
Major stock indicators slid more than 1.5%, cutting nearly 130 points off the Dow Jones industrial average, after continuing claims for unemployment benefits set their 16th straight weekly record.
The report added to recent anxiety that the market may have moved too high too quickly on early signs of recovery in the economy. Despite a pullback this week, the Standard & Poor's 500 index is still up more than 30% from its 12-year lows in early March.
Investors were also worrying about how well governments can keep up with public spending to stimulate their economies after Standard & Poor's said Britain may have its rating cut because of rising debt levels. That would raise the cost of borrowing for the British government, which is taking a big role in bailing out that country's stricken banking system.
Even with governments pumping huge amounts of money into economies around the world there are still questions about how soon a rebound might take hold. In the U.S., home prices are still sliding and unemployment remains at a 25-year high.
"It raises questions about our own situation in terms of our deficits and our national debt," said Alan Skrainka, chief market strategist at Edward Jones, of the S&P report. "There are limits to how high you can take these numbers longer term."
The report weighed on bond prices. The yield on the 10-year Treasury note jumped to 3.36% from 3.19% late Wednesday.
The market did pull off its earlier lows in late afternoon trading, boosted in part by a huge spike in General Motors shares, which jumped more than 15% in the last hour of trading.
GM rose after it agreed with the United Auto Workers to a tentative deal on concessions. The move is a key step toward GM's efforts to restructure outside of bankruptcy court.
The Dow fell 129.91, or 1.5%, to 8,292.13, after earlier falling as much as 201 points. The Standard & Poor's 500 index fell 15.14, or 1.7%, to 888.33, and the Nasdaq composite index fell 32.59, or 1.9%, to 1,695.25.
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