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Stocks Fall on Weak Data

Stocks closed lower Thursday after May pending home sales plunged 30% and initial jobless claims rose.

NEW YORK (

TheStreet

) -- Stocks struggled and finished lower again Thursday, coming under pressure from disappointing pending home sales and a bigger-than-expected jump in initial jobless claims, ahead of Friday's highly anticipated nonfarm payrolls report.

The

Dow Jones Industrial Average

fell by 41 points, or 0.4%, at 9,733. The

S&P 500

lost 3 points, or 0.3%, to 1027 and the

Nasdaq

shed 8 points, or 0.4%, to 2101.

Mike Schenk, senior economist at the Credit Union National Association, said markets are beginning to grasp the fact that this recovery will be unlike any other.

"We're in a place today where market participants are hanging their hats on disappointing results and ignoring the good results. I think it bears mentioning, that by almost any measure, we're better off than we were a year ago," Schenk said, adding that most of the disappointing news has been coming out of the housing market.

"We did have massive stimulus and that stimulus was removed, so in some respects, it shouldn't be all that surprising," he said.

Regarding Friday's June employment report, Schenk said Thursday's jump in initial jobless claims virtually guarantees that the report won't come in above expectations.

"But again, I think expectations were for this recovery to look like a normal recovery. We know labor markets will not recover the way they traditionally recover ... it's going to be a long, slow affair and because of that, we think markets, at least in the near term, will focus on negatives and not focus on positive results."

Congress extended the deadline for the homebuyers' tax credit to Sept. 30 from June 30 late Wednesday, less than a day ahead of the National Association of Realtors' report that

pending home sales plunged 30% in May .

Spain raised €3.5 billion ($4.3 billion) in an oversubscribed bond auction, a day after Moody's warned that it may downgrade the country's debt rating.

The House passed a massive overhaul of

financial regulations that significantly extends the government's authority over large and small financial firms. The Senate, however, has delayed its vote until mid-July.

Overseas on Thursday, Hong Kong's Hang Seng slipped down by 0.6%, and Japan's Nikkei lost 2%. The FTSE in London weakened 2.3%, and the DAX in Frankfurt was down 1.8%.

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The Economy

The National Association of Realtors reported a 30% plunge in May pending home sales, which was much weaker than the 10.5% drop that economists had been projecting.

Earlier, the Labor Department said initial weekly jobless claims rose by 13,000 to 472,000 in the week ended June 26, from last week's upwardly revised level of 459,000. Economists had expected a 1,000 gain, to 458,000, from last week's initially-reported 457,000 claims. On Friday, the government releases its June employment report. According to

Briefing.com

, economists are expecting a 100,000 decline in nonfarm payrolls.

Manufacturing activity in June was also disappointing as the Institute for Supply Management's index came in at 56.2, a much weaker level than the reading of 59 that economists had been anticipating, and a significant drop from May's level of 59.7.

Construction spending, meanwhile, slipped 0.2% in May. Wall Street had been expecting a decline of 0.9%.

The Energy Information Administration said natural gas inventories gained 60 billion cubic feet in the week ended June 25, which was slightly lower than the injection range of 61 billion to 65 billion cubic feet, that analysts polled by Platts had been expecting.

The Treasury Department said it sold 1.1 billion shares of

Citigroup

(C) - Get Report

common stock under its second trading plan, putting the Treasury's total sale of Citigroup shares at 2.6 billion at an average price per share of $4.03 for total gross proceeds of $10.5 billion.

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Company News

Shares of

Bank of America

(BAC) - Get Report

,

General Electric

(GE) - Get Report

and

Merck

(MRK) - Get Report

led the Dow lower today, though positive showings from

McDonald's

(MCD) - Get Report

and

Microsoft

TST Recommends

(WMT) - Get Report

led the blue chips and limited further losses on the average.

Microsoft said today it is discontinuing its Kin phone less than two months after the product went on sale.

Hewlett-Packard

(HPQ) - Get Report

completed its $1.2 billion acquisition of Palm.

IBM

(IBM) - Get Report

acquired security softward firm

BigFix

for an undisclosed sum.

Boeing's

(BA) - Get Report

defense unit is creating a new division for

Argon ST

(STS)

, the Virginia-based electronic defense and surveillance systems developer, that it recently acquired.

BP

(BP) - Get Report

is in discussions with banks to raise roughly $5 billion in short-term loans to help meet its oil spill liabilities, according to the

Financial Times

.

Arena Pharmaceuticals

(ARNA) - Get Report

will receive $50 million upfront from Japanese drug company

Eisai

in exchange for U.S. marketing rights to its experimental obesity drug, lorcaserin.

Amazon

(AMZN) - Get Report

slashed the price on its Kindle DX to $379 from $489 -- the latest move in the e-reader price wars.

Rite Aid

(RAD) - Get Report

recorded a 2.5% drop in June same-store sales resulting from weakness in both front-end and pharmacy sales.

Ford

(F) - Get Report

said sales jumped 13.3% last month.

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>>The Economy

>>Commodities and the Dollar

>>Treasuries

Commodities and the Dollar

Following the EIA data, the August natural gas delivery contract finished 24 cents higher to settle at $4.85 per million British thermal units. Crude oil for August delivery settled after losing $2.68 at $72.95 a barrel.

Elsewhere in commodity markets, the August gold contract plunged $39.20 to settle at $1,206.70 an ounce.

The dollar was trading lower against a basket of currencies, with the

dollar index down by 1.8%.

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>>The Economy

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>>Treasuries

Treasuries

The benchmark 10-year Treasury declined 4/32, pushing the yield up to 2.947%.

The two-year note fell 2/32, lifting the yield to 0.633%. The 30-year bond gained 3/32, dropping the yield to 3.889%.

--Written by Melinda Peer and Sung Moss in New York

.

>>Overview

>>The Economy

>>Company News

>>Commodities and the Dollar