The Dow lost its grip on 10,000, ending near session lows Thursday as trading was light and investors braced for two events Friday: the latest reading on second-quarter GDP and a speech by Fed Chairman Ben Bernanke.
The Dow Jones Industrial Average shed 74.25, or 0.7 percent, to close at 9,985.81. It was the first time the index finished below 10,000 since early July.
Energy, tech and financials were among the weakest links, with IBM and Cisco the two biggest decliners on the Dow.
Just two of the 30 Dow components finished higher — Boeing and Home Depot .
The S&P 500 and the Nasdaq also ended lower. The CBOE volatility index, widely considered the best gauge of fear in the market, rose to nearly 27.
Investors have grown increasingly worried about the economic recovery and were jittery heading into Friday's update on second-quarter GDP as the number is expected to be revised down.
Economists expect the government to report that the economy grew just 1.4 percent in the second quarter, down from the initial estimate of 2.4 percent.
"Anything below 2.0 percent tomorrow will have stocks opening significantly lower," said Todd Schoenberger, managing director at LandColt Trading. "And based on this week's surprises on the downside, we're not ruling out anything...all indications have traders thinking volatility is to be expected leading into the weekend."
The double-dip debate continued: Pimco's Mohamed El-Erian said the recovery is losing momentum. And Economist Nouriel Roubini, aka "Dr. Doom," said chances of a double dip are now at 40 percent.
But some market pros cautioned that the doom is overdone and this is a good time to do some buying.
“It looks like a very good time to be going bargain huntingin the stock market,” Erik Ristuben, chief investment officer at Russell Investments, said on CNBC. “We're seeing maybe a little bit more of a modest recovery than we thought, but we're still in positive territory.”
Offering a little bit of encouragement, first-time applications for unemployment benefits fell by 31,000 last week to to 473,000. And mortgage rates continue to fall: The average on 30-year fixed dropped to 4.36 percent last week, Freddie Mac reported.
Techs were among the hardest hit as they are seen to be one of the biggest beneficiaries of economic growth.
Dellsweetened its bid for 3Par , trumping a counteroffer from Hewlett-Packard . But all three stocks fell in regular trading. After the bell, HP boosted its offer to $27 a share — in cash.
Meanwhile Potash still has just one bid — from BHP Billiton — despite its active solicitation of alternate offers.
Officials in India are holding meetings over security issues involving Research In Motion and its BlackBerry device, and developments from those meetings could move the stock today.
Oil rose for a second day, climbing to $73.36 a barrel. But Barclays cut its 2010 price forecast for oil prices to $78 from $82 and reduced its 2011 forecast to $85 from $92, citing economic concerns.
"There is enough fundamental strength to support prices above the $70 which is increasingly looking like a minimum for the basic health of the industry, but there is also enough macroeconomic disquiet to make any breakout of prices to the upside difficult to sustain," the report said.
In earnings news, shares of JDS Uniphase fell following the company's earnings Wednesday. TiVo reported a smaller-than-expected loss and Guess met profit estimates but saw its shares tumbled more than 10 percent after the retailer delivered a conservative forecast for the current quarter.
Meanwhile, shares of Jo-Ann Stores rose more than 12 percent after the fabric and crafts retailer posted quarterly profit that blew past estimates and raised its full-year profit outlook.
Johnson & Johnson shares fell after the pharmaceutical giant said its orthopedic unit was voluntarily recalling two hip replacement systems. The recall comes just days after the firm recalled approximately 100,000 boxes of contact lensesoverseas.
Wesco Financial shares soared after Berkshire Hathaway said it plans to buy 19.9 percent of the diversified financial corporation that it does not already own.
Treasurys ticked slightly higherafter the government auctioned $29 billion of seven-year notes. The high yield was 1.989 percent and the bid-to-cover ratio was 2.98. This comes after record-low yields in Wednesday's sale of 5-year notes.
Central bankers gathered in Jackson Hole, Wyoming, today for the Fed's annual symposium on the economy. Fed Chairman Ben Bernanke is expected to speak Friday, though he isn't expected offer much in the way of clues on the Fed's next move.
“I think we'll get some additional action from the Fed—[but] the earliest we’d seen that is September 21, because that’s the next FOMC meeting,” Jeffrey Kleintop, chief market strategist at LPL Financial told CNBC.
Volume was light, with about 1 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, nearly 2 to 1.
Still to Come:
FRIDAY: GDP, corporate profits, consumer sentiment; Earnings from Tiffany
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