Stocks extended their losing streak for a third day Thursday after an unexpected jump in jobless claims rattled an already skittish market.
The Dow fell another 30 points at the opening bell, after sliding 72 pointsin the previous session following remarks from several Fed officials.
Most of the 30 Dow components were lower, led by Alcoa , GE and JPMorgan.
Initial claims for state unemployment benefits rose by 18,000last week, the Labor Department reported. Economists had expected a small drop in claims.
This added pressure to the market, already bogged down by dual warnings Wednesday from Federal Reserve Chairman Ben Bernanke that the economy is "not out of the woods" yet and Kansas City Fed President Thomas Hoenig about the dangers of low interest rates.
In fact, Hoenig, the lone dissenter at the past few meetings, went so far as to say that "The time is right to put the market on noticethat it must again manage its risk" — not rely on the Fed to do so.
Many market pros said traders were simply using the Fed comments as an excuse to sell an already overbought market. But today's jobless-claims report was more worrisome.
"Even after recent declines, the level of [jobless] claims is higher than one would expect it to be if private nonfarm payrolls were really poised to begin sustained gains," Joshua Shapiro, an economist at MFR Inc., wrote in a note to clients.
"Along with other data (NFIB survey, consumer sentiment/confidence readings, ISM non-mfg employment index, etc.), this reinforces our belief that the birth/death adjustment and other statistical methodologies are inflating the official payroll data and thus overstating somewhat the degree of improvement," Shapiro said.
Homebuilders slipped as mortage rates rose to their highest level in eight months last week, with the 30-year fixed at 5.21 percent.
Airline stocks soared across the board after news late Wednesday that United Airlines and U.S. Airways are in merger talks. Acrross the pond, Spain's Iberia and the UK's British Airways announced a definitive merger agreement.
Apple shares slipped ahead of the debut of new iPhone software today and Palm shares continued to rise amid takeover rumors.
The nation's major chain stores delivered encouraging results for March: Same-store sales jumped 9.1 percent, the highest increase on record. Economists had expected a more modest 6.3-percent increase.
The results were helped by weak year-earlier comparisons and an early Easter. But the outlook was also encouraging: Kohl's and teen chain Aeropostale both raised their forecasts.
Most retail stocks were lower, with sharp losses in JCPenney and Abercrombie & Fitch. Among the notable advancers were Gap and Target.
Pier 1, a retailer many had left for dead, is back: The stock is up over 6 percent today after the imported home-goods retailer reported same-store sales jumped 19 percent last month as margins improved amid strong pricing.
After the bell Wednesday, Bed Bath & Beyond beat Wall Street estimates with its latest earnings and raised guidance for its fiscal year.
Peabody Energy fell as the company, which wants to buy Australia's Macarthur Coal, but has been rebuffed, is now asking Australian regulators to intervene to prevent Macarthur from buying a smaller local rival.
The Bank of England and the European Central Bank both kept their lending rates flat, as expected.
European stock indexes were lower across the board with concerns over Greek bonds still weighing on the market, as the spread between yields on Greek bonds and German bunds rose to a new high. Asian stocks ended in the red in the wake of the negative session on Wall Street.
Still to come in the U.S.: The Treasury will auction $13 billion 30-year bonds Thursday, with results available shortly after 1 pm. That follows strong demand during Wednesday's sales of 10-year notes.
And, for a second straight day it's a Fed-a-palooza: Minneapolis Fed President Narayana Kocherlakota will appear before the Minneapolis Chamber of Commerce at 2:45 pm. Fed Vice Chairman Donald Kohn will speak at a San Francisco Fed event at 4 pm.
Plus, interim earnings results from Chevron are due after the bell.
Send comments to cindy.perman@nbcuni.com.