Stocks turned lower Thursday as commodities sank and following mixed news on the economy a day after the market suffered its biggest losses since last August.
The Dow Jones Industrial Average fell more than 65 points after plunging more than 2 percent on Wednesdayin the wake of dismal economic news and a Moody's downgrade of Greece's debt deeper into junk status.
Most Dow components fell, led by Chevron .
The S&P 500 fell more than 5 points, breaking through 1,310, a recent support level. The tech-heavy Nasdaq fell after holding slight gains most of the morning. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 18.
Most key S&P sectors fell, led by consumerstaples and energy.
The market tried to find its footing Thursday after a sharp selloff Wednesday triggered by news of unexpected weakness in the manufacturing sector and a smaller-than-expected gain in private payrolls, and compounded Moody's downgrade of Greece's debt deeper into junk status.
Further signs of weakness emerged Thursday as jobless claims fell less than expected, and retailers offered a mixed report on May same-store sales. But most investors were awaiting the May's jobs report on the government due Friday for a clearer picture of the economy's health.
"Leading into the unemployment data tomorrow, investors are very concerned the numbers are going to be worse than expected," said Jonathan Corpina, senior managing partner, Meridian Equity Partners. "I think the bar is set really, really low for tomorrow."
Volume on Thursday was light, which Corpina said will add to volatility for the rest of the session. Unless some news emerges that prompts investors to buy, he said, "the people who didn't sell out yesterday will continue to sell out today."
While investors have been jittery in the first two days of June, the weakness evident in the latest series of economic reports is consistent with a choppy recovery, said Nicholas Colas, chief market strategist at BNY ConvergEx Group. The choppiness shouldn't be a surprise, and it doesn't mean the economy won't turn around later this year, Colas added.
"We’re going to get periods of slowdown but it doesn’t mean we roll over and die," he said.
Colas is expecting May nonfarm payrolls will be in line with Thomson Reuters consenus estimates of a 150,000 gain.
"I don’t think it’s going to be a disaster," he said, noting that U.S. Treasury tax withholding is up about 15 percent, adjusting for the rollback granted by Congress late last year. That's the biggest gain in withholding since January 2008, Colas said.
Among stocks, retailers mostly slumped after posting a mixed bag of monthly sales figures as consumers struggled with higher prices for gasoline.
Costco's same-store sales in May beat estimates thanks to higher gas prices, rising 13 percent, while BJ's Wholesale also did better than expected. But Limited Brands, owner of Victoria's Secret, Gap, Target and TJX all missed.
Overall, analysts expect the rate of growth for U.S. chain stores sales will slow to a 5.4 percent gain compared with a gain of 8.9 percent in April, according to Thomson Reuters. Last May, sales rose only 2.6 percent.