Jobless Data Sends Stocks Reeling; Dow Loses 223

The stock market found little to celebrate heading into the long holiday weekend.

In this June 30, 2009 photo, an unemployed worker, left, talks with an Employment Guide staffer at a...

In this June 30, 2009 photo, an unemployed worker, left, talks with an Employment Guide staffer at a job fair in San Jose, Calif. Stock futures fell ahead of the June unemployment report set for release before the market opens Thursday, July 2. Economists are expecting an increase. (AP Photo/Paul Sakuma)

(AP)

Major stock indexes fell more than 2.6 percent Thursday, pushing the Dow Jones industrials to their lowest level in six weeks, after the government said the unemployment rate hit a 26-year high and employers cut far more jobs than expected.

The data was especially disappointing since it broke a trend of four straight months of improvement in job losses. The report — one of the most closely watched gauges of the economy's health — delivered the latest blow to the market's already waning confidence.

Investor optimism has been shaken in recent weeks amid a barrage of mixed economic reports, making for an erratic market.

This past week was no exception. Stocks rose Monday, then erased nearly all their gains the following day after a report showing an unexpected drop in consumer confidence.

On Wednesday the market bounced back after getting some reassuring data on manufacturing and housing, only to tumble again on Thursday on the disappointing jobs report.

"There's not a lot of conviction on either side," said Jill Evans, co-portfolio manager of the Alpine Dynamic Dividend Fund.

The Dow Jones industrials lost 223.32, or 2.6 percent, to 8,280.74, the lowest close since May 22. It was the average's worst day since April 20.

The Standard & Poor's 500 index fell 26.91, or 2.9 percent, to 896.42 and the Nasdaq composite index fell 49.20, or 2.7 percent, to 1,796.52.

Trading on the New York Stock Exchange was extended until 4:15 p.m. Eastern time in order to execute customer orders impacted by system irregularities, an NYSE spokeswoman said.

The stock market rallied furiously this spring off of 12-year lows beginning in early March on hopes for a recovery, but the upward momentum has stalled since mid-June as doubts grow about whether the economy had really found a bottom.