Stocks drop on jobless claims, woes in Europe
A September stock rally weakened Thursday as investors were disappointed by a jump in unemployment claims and more signs of trouble for Europe’s economy.
The market got off to a bad start and stayed in a funk all day. Applications for unemployment benefits rose unexpectedly last week, and a report out of Europe showed a lower reading on business activity in the 16 countries that use the euro.
More bad news came from Ireland, which reported that its economy shrank 1.2% in the second quarter.
The Dow Jones industrial average closed down nearly 77 points, its second day of losses.
The Standard & Poor’s 500 index, the benchmark most often used by professional investors, fell below a key threshold watched by technical analysts. Gold hit another record as traders sought safe havens.
The slide raised doubts about whether a three-week rally that vaulted stocks higher in September would continue.
The Dow is still up 6.5% for the month, but is 4.8% below its 2010 high reached April 26. For the year, it’s up 2.2%.
Traders were disappointed to see first-time unemployment claims rise last week, breaking a recent trend of declines.
The Labor Department said claims jumped by 12,000 and are still at levels that signal employers are not significantly adding new jobs.
“It’s all about jobs right now,” said Jack Ablin, chief investment officer at Harris Private Bank. “When claims pick up, that’s a worrisome sign.”