US stocks fall on renewed concerns about economy

NEW YORK – Stocks backtracked from an early plunge Thursday but still closed lower on concerns about lingering economic weakness in the US. Investors were also uneasy about the possibility that Greece's rising debt problems might spill over to other countries. But the dollar, which spiked early in the day as investors sought safe investments, came off its highs. And that signaled that investors, at least for now, had lost some of their fears about overseas economies. The Dow Jones industrial average closed down 53 points after having fallen 188. Treasury prices, like the dollar, rose as investors sought safety. An unexpected rise in first-time claims for unemployment insurance made for a sour mood in the market. 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. The market was watching the dollar as it gained against the euro, which is seen in jeopardy because of the weak economy not only in Greece, but in other European countries as well. The euro touched a nine-month low against the dollar before regaining some ground. Concerns about Greece have dogged investors this year but grew after credit rating agencies Standard & Poor's and Moody's said they might further downgrade the country's debt. That would make it harder for the country to borrow. Trading in the US 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. 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. Crude oil fell $1.83 to $78.17 per barrel on the New York Mercantile Exchange. Gold rose. The drop in major stock indexes masks the broad improvement in the market. For much of the day, all 30 stocks that make up the Dow were lower. In the end, five turned higher and one was unchanged. Aluminum producer Aloca Inc. was the biggest gainer, rising 25 cents, or 1.9 percent, to $13.31. The Chicago Board Options Exchange's Volatility Index, which is known as the market's fear gauge, ended down 0.8 percent after jumping 11.9 percent in morning trading. A rise in the VIX signals that investors are expecting swings in the market. By the closing bell there were slightly more advancing stocks than decliners on the New York Stock Exchange. Early in trading more than five stocks fell for every one that rose. Jim Maguire Jr., a trader at E.H. Smith Jacobs in New York, said he expects the market to continue the back-and-forth trading it has logged this year as investors look for clues about the pace of an economic rebound. "There is a feeling out there that this is not a self-sustaining economy as of yet and there is this expectation that the stock market is going to falter because of it," he said. Maguire said questions about how quickly the rebound will occur is keeping traders from placing big bets after a year of enormous gains in stocks. The Dow hit a 12-year low in March last year. "Ultimately, I think we're looking at a consolidation here and I think it could be a very long haul," he said. "The characteristics of that are typically these types of choppy markets. We get these updrafts and downdrafts." Stocks broke a two-day losing streak on Wednesday after Federal Reserve Chairman Ben Bernanke said in a semiannual report to Congress that the central bank plans to keep interest rates low to help the economy. There was little reaction to his testimony before the Senate on Thursday. Advancing stocks narrowly outpaced those that fell on the NYSE, where consolidated volume came to 4.58 billion shares, compared with 4.2 billion Wednesday. The Russell 2000 index of smaller companies rose 0.03, or less than 0.1 percent, to 630.46. Overseas, Britain's FTSE 100 fell 1.2 percent, Germany's DAX index dropped 1.5 percent, and France's CAC-40 fell 2 percent. Japan's Nikkei stock average fell 1 percent.— AP