Stocks Retreat as Data Disappoints

NEW YORK ( TheStreet) -- Stocks slumped Thursday with shaky data on employment, manufacturing and housing raising fresh questions about the health of the U.S. economy.

Early gains in the wake of a smooth Spanish debt sale and largely positive earnings reports evaporated with investors turning their focus to another underwhelming jobless claims report, a shortfall in existing home sales last month and a bland read on manufacturing in the Philadelphia region.

The Dow Jones Industrial Average fell 69 points, or 0.5%, to close at 12,964, bouncing nearly 70 points after scraping a session low of 12,897.

Breadth was extremely negative with 27 of the index's 30 components moving lower, led by Alcoa ( AA), Bank of America ( BAC), Caterpillar ( CAT), DuPont ( DD), and McDonald's ( MCD) all down more than 1%.

General Electric ( GE)m Travelers ( TRV) and Verizon Communications ( VZ) were the only blue chippers posting gains.

The S&P 500 lost 8 points, or 0.6%, to finish at 1377. The Nasdaq was off 24 points, or 0.8%, settling at 3007.

Apple ( AAPL) shares continued their recent run of volatility, falling back below $600 in afternoon trades. The stock closed at $587.44, down 3.4% on volume of nearly 30 million as some apprehension leaking into the market about its fiscal second-quarter results due next Tuesday.

"The fact that economic data is not continuously going up, up, up is not really just a warning to us, but at some point investors are going to have to sort of reassess this U.S.-economy-is-doing-just-fine theory that's been gaining steam since late last year, because the last three weeks of economic data reports have not been all that good," cautions Dan Greenhaus, chief global strategist at BTIG.

After the closing bell, Microsoft ( MSFT) reported better than expected earnings, sending its stock up 3% in the extended session.

Wall Street lost ground Wednesday, weighed down by lackluster earnings from tech heavyweights Intel ( INTC) and IBM ( IBM) and nervousness about the market appetite for Spanish debt.

Spain ended up selling €2.54 billion of two-year and 10-year bonds, which came in higher than the targeted range of €1.5 billion to €2.5 billion. The Spanish government was able to sell the 10-year bonds at an average yield of about 5.7%, whereby demand for the security was about 2.4 times what was sold versus about 2.2 times at a Jan. 19 auction. The average yield for the two-year was about 3.5%.

"European bond auctions went a little better than people had feared, but by the same token we see news stories that Spanish banks are running out of the cash that they were using -- they had borrowed from the ECB to go out and buy Spanish and European sovereign bonds," says Brian Gendreau, market strategist, Cetera Financial Group.

In the U.S., the Labor Department reported that jobless claims fell by 2,000 to 386,000 in the week ended Apr. 14, from an upwardly revised 388,000 in the previous week. The number was worse than expected, as economists polled by Reuters forecast a total of 370,000 new jobless claims filings.

The four-week moving average was 374,750, an increase of 5,500 from the previous week's 369,250. The number of people continuing to receive jobless benefits increased by 26,000 in the week ended Apr. 7 to 3.3 million.

"It looks like a lot of the very strong momentum that developed in the jobs market three out of the last four months has fallen off," says Gendreau.

The National Association of Realtors reported that March existing home sales fell 2.6% to a seasonally adjusted annual rate of 4.48 million, from an upwardly revised 4.6 million in February.

The Philadelphia Fed regional manufacturing index for April came in at a reading of 8.5, suggesting modest expansion, but was down from 12.5 in March. Meanwhile, the Conference Board's index of leading economic indicators increased for a sixth month in March, up 0.3%, compared with a gain of 0.7% in February.

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