Stocks sink as euro drops, jobless claims rise - | Chattanooga News, Weather & Sports

Stocks sink as euro drops, jobless claims rise

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AP Business Writers

NEW YORK (AP) - The stock market extended its sharp slide Thursday after disappointing employment news added to investors' already bleak view of the world economy.

The Dow Jones industrial average fell 200 points in morning trading. Interest rates fell sharply in the Treasury market as investors once again sought the safety of U.S. government debt.

The euro is falling again and continues to hover near a four-year low. It has become a key indicator for confidence in Europe's economy.

The Labor Department said new claims for unemployment benefits rose by 25,000 to 471,000, their largest amount in three months. That came as an unpleasant surprise to investors who were expecting a slight drop to 440,000. High unemployment remains one of the biggest obstacles to a sustained recovery in the U.S. The latest report snapped a streak of four straight weekly declines and again calls into question the strength of the job market.

Weekly claims have been stuck around 450,000 since January, unable to break closer to the 425,000 range that is considered a sign that employers are regularly hiring new workers.

The employment report increased investors' worries about the global economy. They have been selling heavily the past few weeks amid growing concerns that Europe's debt problems will halt the recovery in the region and hurt the rebound in the U.S.

In the first hour of trading, the Dow fell 204.28, or 2 percent, to 10,240.09. The broader Standard&Poor's 500 index fell 25.50, or 2.3 percent, to 1,089.55. The Nasdaq composite index fell 53.22, or 2.3 percent, to 2,245.15.

With Thursday's drop, the S&P 500 is down more than 10 percent from its trading high for the year set last month. Such a drop is considered by many analysts to be a "correction" in the market. Many analysts pay more attention to drops from closing highs, not trading highs.

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