Stocks closed lower Thursday with all three major averages logging their worst May since 2010, driven by mounting concerns over the euro zone debt crisis in addition to worries over a slowing U.S. economy.
Meanwhile, Facebook recovered to close near $30 a share after dipping below $27 earlier in the session. Meanwhile, S&P Capital IQ lowered its price targeton the social networking giant to $27 from $30.
The Dow Jones Industrial Average slipped 26.41 points, or 0.21 percent, to close at 12,393.45. Caterpillar led the laggards, while BofA gained. The blue-chip index failed to log a two-day win streak this month.
The S&P 500 dipped 2.99 points, or 0.23 percent, to end at 1,310.33. The Nasdaq slid 10.02 points, or 0.35 percent, to finish at 2,827.34.
For the month, the Dow and the S&P 500 dropped more than 6 percent, while the Nasdaq plunged nearly 7 percent. The Dow and Nasdaq posted their worst monthly declines since May 2010, while the S&P posted its biggest one-month drop since last September.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, slipped below 24.
Among the key S&P sectors, techs closed lower, while financials climbed.
Stocks started the session lower following a batch of dismal economic reports but cut their losses around noon after a report that the IMF was in talks to provide a rescue loan to Spain. However, the IMF quickly denied the report and said the annual economic talks between the IMF and Spanish authorities will take place next week.
“We’re far from seeing any clarity from Europe, [but] central banks in general are helping to limit our downside,” said Rebecca Patterson, chief market strategist of JPMorgan Asset Management. “[Still,] we need better economic data, Greece resolved and I don’t see any of that happening in the short term.”
On the economic front, weekly jobless claims gained for the fourth-straight week, according to the Labor Department. And the U.S. economy grew at a slower pace than expected in the first quarter, according to the Commerce Department. And business activity in the Midwest slipped in May, according to the Chicago ISM.
Adding to woes, private-sector jobs growth came in at a disappointingly weak 133,000from April to May, according to ADP and Macroeconomic Advisors.
The reports come a day ahead of the widely-followed May government jobs. Non-farm payrolls are expected to show a gain of 150,000 in May, according to a Reuters poll, after a small gain of 115,000 new jobs in April, the fewest in six months.
Morgan Stanley CEO James Gorman defended his bank’s performance as lead underwriter on Facebook’spublic offering, despite waves of criticism from investors and a potential legal review of the deal’s marketing.
In addition, the investment bank plans to buy 14 percent more of Smith Barneyfrom Citi and will begin a 90-day process determine the fair market value of the additional stake.
Most retailers posted solid same-store sales gains in May, with chains such as Target , TJX , and Limited topping analysts' estimates for the month.
Meanwhile, Costco , Buckle and Wet Seal all fell short of expectations.
Striking workers at a Caterpillar plant in Illinois rejected the company's latest contract offer, an official with the International Association of Machinists and Aerospace Workers said.
Billionaire investor Carl Icahn, who last year failed to get his nominees elected to the board of Forest Laboratories, plans to back another slate of directors at the drugmaker's next shareholder meeting, according to a regulatory filing.
Talbots skyrocketed after private equity firm Sycamore Partners said it will acquire the women's clothing chain in a deal worth about $193 million.
Also on the M&A front, Gaylord Entertainment rallied after the company said it will sell the Gaylord hotels brand to Marriott International for $210 million in cash.
U.S. Airways Group and private equity firm TPG Capital may team up to bid for American Airlines' parent, AMR, people familiar with the discussions told Reuters.
Meanwhile, JetBlue gained after UBS raised its rating on the firm to "buy" from "neutral" and boosted its price target to $8 from $6.
Joy Global tumbled after the mining equipment maker said it expects order rate to moderate and sales to remain unchanged over the next few quarters.
TiVo slumped after the firm a bigger-than-expected loss and handed in a weak quarterly guidance.
—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
FRIDAY: Non-farm payrolls, personal income & outlays, ISM mfg index, construction spending, auto sales, Wal-Mart shareholders mtg
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