Market drops on concerns that weak US job market, Greece debt woes will stall economic rebound
Stocks fell Thursday but closed well off their lows as investors set aside some of concerns about Greece’s rising debt.
The recovery came as the dollar pulled back from an early spike. The dollar is seen as a safe investment. So its retreat signals that by the end of the day, investors had lost some of their fears about Greece’s debt problems hurting other countries.
The Dow Jones industrial average fell 53 points after being down 188. Treasury prices rose as investors sought safer investments.
The early slide came as the possibility of downgrades of Greece’s debt fanned worries that financial troubles there will spread to other countries. The euro fell and touched a nine-month low against the dollar. Stocks often get hit when the dollar jumps because commodity prices often fall. A drop in commodity prices hurts energy and materials stocks.
An unexpected rise in first-time claims for unemployment insurance added to the sour mood that dominated trading early in the day and raised concerns that the labor market will worsen.
The Labor Department said first-time claims for unemployment insurance rose by 22,000 to a seasonally adjusted 496,000. Economists polled by Thomson Reuters had forecast a drop in claims.
It was the second straight week that claims rose unexpectedly. High unemployment remains one of the biggest obstacles to a sustained economic recovery. The Labor Department’s monthly report on employment will be released next week.
Trading in the U.S. has been choppy in recent weeks because of uneasiness about the economy. Global markets retreated earlier this month because traders were worried about Greece’s debt problems. The market’s drop early in the week, a rebound and the latest slide signal that investors are waiting for clearer information on the direction of the economy.
Justin Golden, a strategist at Macro Risk Advisors in New York, said there is an undercurrent of worry about long-term issues like debt in Greece. The presence of the concerns means it doesn’t take much to rattle investors.
“It’s a statement of how fragile the markets really are,” Golden said.
According to preliminary calculations, the Dow fell 53.13, or 0.5 percent, to 10,321.03. The broader Standard & Poor’s 500 index slipped 2.30, or 0.2 percent, to 1,102.94. The Nasdaq composite index fell 1.68, or 0.1 percent, to 2,234.22.
Bond prices rose, pushing yields lower. The yield on the benchmark 10-year Treasury note fell to 3.64 percent from 3.70 percent late Wednesday.