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NEW YORK: Wall Street stocks were awash in losses on Thursday as weak retail results and data suggesting mounting job losses heightened fears on the US economic outlook.
The Dow Jones Industrial Average skidded 344.65 points (2.99 percent) to end at 11,188.23, its weakest close since late July as the blue-chip index moved into "bear market" territory - down 20 percent from last year's highs.
The Nasdaq composite slid 74.69 points (3.20 percent) to 2,259.04 and the broad-market Standard & Poor's 500 index shed 38.15 points (2.99 percent) to 1,236.83.
Data showing higher jobless claims in the past week and more losses in private-sector employment weighed on sentiment, as did a mixed batch of monthly sales reports from the retail sector.
Retail sector leader Wal-Mart delivered better-than-expected August sales but most other stores showed weakness, raising fears about the health of the US consumer.
"The Wal-Mart news is almost certainly a sign the the middle class is joining those below the poverty line in making the huge retailer their first and only place to shop," said Douglas McIntyre of the financial website 24/7 Wall Street. "It is also a signal that the recession may be deepening."
The US economy expanded at a 3.3 percent pace in the past quarter but many analyst say the figure was distorted by exports and that domestic activity is slumping.
Highlighting those concerns, the Labour Department said new unemployment claims rose by 15,000 in the past week to 444,000.
"This looks startlingly awful but we have no way of knowing if the rise in claims reflects continued distortions caused by the extension of benefits, or the impact of Hurrican Gustav, or the underlying trend in claims or some combination of the three," said Ian Shepherdson, at High Frequency Economics.
A separate survey by the payroll firm ADP showed the loss of 33,000 private-sector jobs in July. This heightened anxiety ahead of a key report on Friday on monthly US payrolls for August.
The market appeared to shrug off news that US labour productivity was revised upward to a 4.3 percent gain from 2.2 percent in the second quarter, a positive sign for a sputtering economy.
Also ignored was a report showing a modest expansion in the vast US service sector in July. The Institute of Supply Management reported its non-manufacturing index rose to 50.6 points, just above the level of 50 that determines expansion or contraction.
Many analysts say the grim outlook was highlighted by the Federal Reserve Beige Book report on Wednesday, which cited weak housing, difficult credit and "retrenchment" in consumer spending, and high inflation pressures.
"With home prices continuing to spiral down, unemployment rising and consumer credit availability continuing to tighten, we find it difficult to see the consumer leading an economic recovery within the next year," said Fred Dickson at DA Davidson & Co.
"The latest evidence shows consumers pulling back," said Nigel Gault, economist at Global Insight. "We expect outright declines in real consumer spending during both the third and fourth quarters - the first such declines since 1991."
Among key stocks, Boeing slumped 4.6 percent to 63.03 dollars as the International Association of Machinists, the aircraft maker's largest labour group, voted to strike but delayed action pending talks with a federal mediator.
Wal-Mart shares held nearly steady, down 0.02 percent at 59.78 dollars as the world's biggest retail group reported better-than-expected sales for August. Others in the sector were not as fortunate: Nordstrom shed 4.02 percent to 31.99 and Sears Holdings dropped 4.01 percent to 91.57 dollars.
Lehman Brothers lost 10.45 percent to 15.17 dollars amid ongoing speculation about whether the troubled investment bank would find fresh capital.
In the tech sector, equipment maker Ciena Corp. led decliners with a slide of 24.9 percent to 13.09 dollars after warning of weaker profits. Rival Cisco Systems shed 4.4 percent to 22.29.
Bonds were a safe-haven move. The yield on the 10-year Treasury bond fell to 3.643 percent from 3.697 percent on Wednesday and that on the 30-year bond eased to 4.281 percent against 4.318 percent. Bond yields and prices move in opposite directions. - AFP/de
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