Wall Street tumbled Thursday on more disappointing economic news -- retailers posted sluggish back-to-school sales reports and the government said the number of workers seeking unemployment benefits spiked last week. The Dow Jones industrials fell more than 200 points.
Investors, already highly anxious about the overall state of the economy, were further unsettled when many of the nation's retailers said shoppers curtailed spending last month due to higher gas and food prices. Wal-Mart Stores Inc., the world's largest retailer, beat Wall Street projections because of its discounts.
Meanwhile, the Labor Department said new applications for unemployment insurance rose by 15,000 from the previous week. That broadly missed expectations for a fourth-straight week of declines.
"We're seeing nothing but sellers," said Ted Oberhaus, director of equity trading at Lord, Abbett & Co. LLC. "In a bear market, you sort of really don't need an excuse to sell."
The market showed little reaction when the Institute for Supply Management said the service sector grew unexpectedly in July for the first time in three months as new orders increased and inflation moderated.
The trade group of purchasing executives said its services sector index rose to 50.6 in August from 49.2 in July. It beat economists' prediction of a reading of 50.0; a reading below 50 signals contraction, while a reading above 50 indicates growth.
In late morning trading, the Dow Jones industrial average fell 231.07, or 2.00 percent, to 11,301.81.
Broader indexes were also lower. The Standard & Poor's 500 index fell 23.32, or 1.83 percent, to 1,251.66; the Nasdaq composite index dropped 44.50, or 1.91 percent, to 2,289.23.
Bond prices moved higher Thursday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.67 percent from 3.70 percent late Wednesday.
A barrel of light sweet crude fell 60 cents to $108.76 cents to on the New York Mercantile Exchange. It dipped below $108 a barrel on Wednesday.
In corporate news, Wal-Mart said sales of groceries and back-to-school products helped its August same-store sales rise 3 percent, beating expectations. Shares rose 43 cents to $60.25.
But other retailers fell. JCPenney Co. slipped 87 cents to $40.77, while Gap Inc. fell 54 cents to $19.43.
Toll Brothers Inc. reported it swung to a third-quarter loss as sales fell amid the housing slump. However, Chief Executive Robert Toll said he is seeing signs the market is stabilizing, and that pushed shares up 33 cents to $25.15.
The Russell 2000 index of smaller companies fell 17.09, or 2.30 percent, to 724.82.
Declining issues outpaced advancers by a 3 to 1 basis on the New York Stock Exchange, where volume came to 257.8 million shares.
Overseas, the Bank of England and European Central Bank left their benchmark interest rates unchanged, a move analysts expected as both face rising inflation and slowing economic growth. Britain's FTSE 100 fell 1.75 percent, Germany's DAX index fell 2.60 percent, and France's CAC-40 shed 2.61 percent. Japan's Nikkei stock closed down 1.04 percent.
