By STEPHEN BERNARD, AP Business Writer Stephen Bernard, Ap Business Writer – 11 mins ago
NEW YORK – Stocks extended their recent slide Thursday after first-time claims for unemployment benefits rose last week, a further indication the economy remains weak.
The Dow Jones industrial average fell about 65 points in morning trading. Investors again scooped up Treasurys as they sought the relative safety of government bonds.
Stocks were also under pressure as major European indexes dropped when a closely watched reading on business activity in the 16 countries that use the euro declined more than expected. That reignited worries about the strength of Europe's economy as it tries to recover from recession and many countries face debt problems. The euro dropped against the dollar after the disappointing report.
Traders were disappointed to see first-time unemployment claims rise last week, breaking a recent trend of fewer people seeking benefits. The Labor Department said claims jumped by 12,000 last week and are still at levels that signal employers are not significantly adding new jobs.
Economists polled by Thomson Reuters forecast claims would remain unchanged compared with the prior week.
Claims had fallen consistently in recent weeks reducing worries that the economy might fall back into recession. Modest improvements in many economic reports this month were enough to drive stocks sharply higher in September. The Dow Jones industrial average has risen in 13 of the past 16 days, though a five-day winning streak was snapped Wednesday.
The Dow Jones industrial average fell 65.08, or 0.6 percent, to 10,674.45 in morning trading.
The Standard & Poor's 500 index fell 6.93, or 0.6 percent, to, 1,127.35, while the Nasdaq composite index fell 7.95, or 0.3 percent, to 2,326.60.
About four stocks fell for every one that rose on the New York Stock Exchange where volume came to 80.3 million shares.
A separate report Thursday is expected to show sales of existing homes rose about 6 percent in August from a 15-year low in July. The National Association of Realtors is expected to report sales of previously occupied homes rose to an annual rate of 4.1 million in August.
Bond prices rose for the third straight day as investors increasingly expect the Federal Reserve to restart a bond-buying program to help further stimulate the economy. The jobs report likely added to the expectations the Fed will step in to tray and spark further growth.
The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.50 percent from 2.55 percent late Wednesday. Its yield is often used as a benchmark to set interest rates on mortgages and other loans.
In corporate news, McDonald's Corp. became the latest company to increase its dividend. The world's biggest hamburger chain raised its dividend 11 percent, but its shares fell 1 cents to $75.02.
Overseas, Britain's FTSE 100 fell 1.1 percent, Germany's DAX index dropped 1 percent, and France's CAC-40 fell 1.5 percent. Japanese markets were closed for a holiday.
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