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A bout of weak economic data and continued concerns about major eurozone countries overshadowed generally upbeat corporate earnings, sending the markets skidding into the red.
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The Dow Jones Industrial Average fell 68.7 points, or 0.53%, to 12964, the S&P 500 dipped 8.2 points, or 0.59%, to 1377 and the Nasdaq Composite fell 23.9 points, or 0.79%, to 3008.
It's been another volatile week on Wall Street: stocks posted big gains on Tuesday just to pull back on Wednesday and Thursday.
Looking at the broad markets, the worst performers by a wide margin were industrial and technology companies. Out of the blue chips, McDonald's (NYSE:MCD), Alcoa (NYSE:AA), Bank of America (NYSE:BAC) and Caterpillar (NYSE:CAT) posted the biggest losses.
Market participants bid up U.S. Treasury bonds amid the rising anxiety on the day. As a result, the yield on the 10-year note fell 0.018-percentage point to 1.963%.
Traders had a bounty of economic data to sort through on the day.
Sales of existing single-family homes fell 2.6% in March to a 4.48-million unit annualized rate, according to the National Association of Realtors. Economists had expected sales to rise to an annualized rate of 4.62 million units.
"The recent improvement in housing indicators has clearly stalled in March," Dan Greenhaus, chief global strategist at BTIG wrote in a note to clients on the heels of the report. "We are most certainly not set to declare that the housing recovery is over but a strong start to the spring selling season is simply not in the data."
Manufacturing activity in the mid-Atlantic region expanded at the slowest pace since January in April, according to the Philadelphia Federal Reserve. The banks's monthly gauge hit 8.5 on the month from 12 the month prior. Economists were looking for a reading of 12.5. Readings above 0 point to expansion while those below indicate contraction.
The number of individuals applying for first-time unemployment benefits fell to 386,000 last week from a revised 388,000 the week before, the Labor Department reported. Economists were expecting claims to drop to 370,000 from an initially reported 380,000.
Eurozone Worries Still in Focus
The debt crisis in Europe has once again come back into focus as the yield on Spanish and Italian debt has started climbing amid concerns about the countries' abilities to close their fiscal gaps amid a weak economy.
The closely-eyed bond sale in Spain saw strong demand on Thursday. The country sold 2.54 billion euro in two and 10-year notes, better than its target of 2.5 billion. Bid-to-cover ratios, which are another measure of demand, also improved markedly from the last auction. Still, the strength came at a price: the borrowing cost on both increased, with the 10-year yield averaging 5.743%.
With anxiety still high, the cost to insure Spain's debt stayed near record highs, according to London-based Markit, which records spreads on sovereign credit default swaps. Spain's IBEX sold off by 1.6%, while the U.S. dollar strengthened by 0.32% against a basket of six world currencies tracked by the dollar index.
Earnings Season Revs Up
Earnings season is also in full swing, with a slew of major companies reporting generally upbeat results on the day.
Bank of America (NYSE:BAC) posted a first-quarter profit of 3 cents a share, or 31 cents excluding an adjustment related to credit spreads. Analysts were looking for the bank to earn 12 cents. Revenue came in at $22.28 billion, lighter than the $22.51 billion expected.
Morgan Stanley (NYSE:MS) posted a first-quarter loss of 5 cents a share on continuing operations. Excluding a one-time charge, the investment bank earned 71 cents, much stronger than the 44 cents analysts expected. Sales came in at $8.9 billion, stronger than the $7.31 billion expected.
Verizon Communications (NYSE:VZ) unveiled a first-quarter EPS of 59 cents on sales of $28.24 billion. The blue-chip technology company was forecast to earn 58 cents on $28.17 billion.
Travelers (NYSE:TRV) revealed a first-quarter operating profit of $2.01 a share on sales of $6.39 billion. Analysts expected the Dow component to earn $1.52 a share on $5.71 billion.
DuPont (NYSE:DD) said it earned $1.61 a share last quarter, excluding one-time items, topping forecasts from analysts for $1.55. The blue-chip company posted sales of $11.23 billion, which was in-line with expectations.
Energy markets were mostly lower. Crude oil traded in New York dipped 40 cents, or 0.39%, to $102.27 a barrel. Wholesale New York Harbor gasoline sold off by 5 cents, or 1.5%, to $3.154 a gallon.
In metals, gold rose $1.80, or 0.11%, to $1,641 a troy ounce.
European blue chips fell 1.9%, the English FTSE 100 slid 0.01% to 5745 and the German DAX dipped 0.9% to 6671.
In Asia, the Japanese Nikkei 225 slumped 0.82% to 9588 and the Chinese Hang Seng rallied 1% to 20995.