(Updated with stock prices.)
NEW YORK (
After locking in 15% gains for the third quarter, the
Dow Jones Industrial Average
started off the new three-month period by taking a 204.89-point plunge, dropping 2.1%, to 9507.39, while the
slid 27.4 points, or 2.6%, to 1029.68. The
edged down 64.94 points, or 3.1%, to 2057.48.
Losses were broadbased with financials, commodities, technology and home stocks hard hit. The Philadelphia Stock Exchange Gold and Silver Index, the Philadelphia Semiconductor Index, and the KBW Bank Index all sank more than 4%.
Stocks fell early after the Department of Labor said there were 551,000 new
last week, up from an upwardly revised 534,000 the week prior and topping expectations for 535,000.
Those data, paired with a worse than expected report on private sector job losses earlier in the week, have traders cautious ahead of the most-anticipated data of the week, Friday's unemployment report, says Doug Roberts, chief investment strategist at ChannelCapitalResearch.com.
"You've seen chinks in the armor, so people are hesitant -- especially with it coming on a Friday," says Roberts. "There's uncertainty, and until there's some sort of resolution, people are going to be nervous."
Adding pressure to the market, Goldman Sachs changed its forecast for September nonfarm payrolls from a loss of 200,000 to a loss of 250,000, wrote James DePorre, founder and CEO of Shark Asset Management, on
In other data Thursday, Institute for Supply Management's manufacturing index
0.3 points to 53.6, vs. expectations for a rise to 54. The Chicago PMI spurred selling earlier in the week, when it indicated a contraction in manufacturing.
"Tentative signs in housing, automobile, Chicago PMI and several other economic indicators continue to remind us that the month of September was weaker than generally expected," writes Seabreeze Partners' Doug Kass. He later adds that, "at the risk of being the boy who cried wolf, I believe that market participants have a false sense of security in rising equity share prices."
"Plenty of stocks were pumped up by mark-up buying. The pump-up and subsequent support underneath is now gone," writes Jim Cramer on
."We know that jobless claims aren't improving. That's a real negative, especially for retail and banks. But, and this is a big but, we are not seeing the right stocks go up if we are signaling another dip down."
Not all of the recent data have been negative. Among the day's surprises, construction spending unexpectedly increased by 0.8% in August, and pending home sales rose by 6.4% vs. expectations for a much smaller, 1% gain.
At the same time, the Department of Commerce said personal income increased 0.2% in August, in line with the prior month's increase, and spending ticked up 1.3%, respectively, vs. 0.3% in July. Both readings were slightly better than expected.
In other news Thursday,
Chairman Ben Bernanke testified before the House Financial Services Committee on regulatory reform. Bernanke told members of Congress that a council of regulators should monitor systemic risk, while all systemically important financial firms should be subject to a consolidated regulator.
Bank of America
said late Wednesday that CEO
will retire by the end of the year and will leave his position as a director on the company's board. The company said its board would "continue ongoing planning" in order to name a successor by the time Lewis steps down on Dec. 31.
was also making headlines with news that it is buying Norwegian video conferencing-equipment maker
for $3 billion in cash.
about a deal to spin off GE's NBC Universal unit into a private company in which Comcast would own a 51% stake, according to a report from David Faber of
, which is owned by NBC Universal.
Traders were also keeping an eye on oil, which surged $3.90 on Wednesday after inventory and consumer confidence data. Crude futures were falling 39 cents, to $70.22, while gold lost $8.60 to $1001.6.
Stocks overseas were mostly higher. In Europe, London's FTSE 100 and the DAX in Frankfurt fell 1.7% and 2.1%, respectively. But in Asia, the Nikkei in Japan fell 1.3%, while Shanghai Composite in China and Hang Seng in Hong Kong were closed for the session.
The International Monetary Fund raised its forecast for global growth next year, estimating that the world economy will now expand at 3.1% vs. prior estimates of 2.5%, and that economies in China and India will grow by 9% and 6.4%, respectively.
-- Written by Elizabeth Trotta in New York.