Discouraging reports on homes, jobs sink Dow

NEW YORK - Stocks began the third quarter with another loss after reports on jobs, housing, and manufacturing raised investors' economic worries.

The Dow Jones industrial average fell nearly 42 points Thursday for its sixth straight loss, although it ended well off its lows ahead of the government's June jobs report. The report is critical because a rebound in jobs is needed for the economy to recover. The numbers are due before the start of trading Friday.

The latest economic reports followed a bad second quarter for investors and added to the importance of Friday's snapshot of the labor market.

The government said initial claims for unemployment benefits rose 13,000 last week to 472,000. Economists had forecast a drop in claims. The report comes a day after payroll company ADP said private employers did not increase hiring as much as expected last month.

Other economic news added to investors' concerns. The National Association of Realtors said the number of buyers who signed contracts to buy homes fell to a new low in May after a rush of purchases to meet an April 30 tax-credit deadline. Meanwhile, the Institute for Supply Management said that its manufacturing index fell in June but that industrial activity still appeared to be growing.

There were some pockets of strength in the market Thursday. Retail stocks mostly rose after a private-equity firm disclosed that it purchased a 9.5 percent stake in BJ's Wholesale Club Inc. with the intention of taking it private. BJ's shares rose 17.6 percent. Limited Brands Inc., parent of the Victoria's Secret and Bath and Body Works chains, rose 2.9 percent after Fitch Ratings Inc. raised its ratings on the company's credit.

The Dow fell 41.49, or 0.42 percent, to 9,732.53. It was the lowest close since October 2009. It was down as much as 152 points in late-morning trading.

The S&P 500 index fell 3.34, or 0.32 percent, to 1,027.37. The Nasdaq composite index fell 7.88, or 0.37 percent, to 2,101.36.

The Dow dropped 10 percent for the April-to-June quarter, while the S&P 500 index fell 11.9 percent.

There were signs Thursday that some traders think the slide has been overdone: Treasury bond yields rebounded after sliding early in the day. The euro rose sharply against the dollar in a sign of confidence in Europe's economy. Also, the market's fear gauge fell. A drop in stocks usually drives the Chicago Board Options Exchange's Volatility Index higher. Instead, the VIX dropped 4.9 percent.

The dollar fell Thursday along with commodities including oil and gold. Crude oil fell $2.68, or 3.5 percent, to $72.95 a barrel.

The June jobs report is expected to show that employers cut about 110,000 positions for the month. That figure reflects the loss of about 240,000 temporary census jobs.

Among individual stocks, BJ's rose $6.53, or 17.64 percent, to $43.54, while Limited rose 64 cents, or 2.90 percent, to $22.71.

The Russell 2000 index of smaller companies fell 4.73, or 0.78 percent, to 604.76.

Britain's FTSE 100 dropped 2.3 percent, Germany's DAX index fell 1.8 percent, and France's CAC-40 lost 3 percent. Japan's Nikkei stock average fell 2 percent.