"Unfortunately, this more than four-year low is not a clear signal of labor market improvement," said Jeffrey Greenberg, an economist at Nomura Securities in New York. "The first week of July is typically when the automobile industry shuts down plants and conducts annual 'retooling.' Seasonally-adjusting data during a holiday week is complicated enough. Add the retooling to this and the adjustment for the...holiday week becomes especially imperfect."
On the Dow, only 10 of the 30 components traded on the positive side, but big gainers such as Merck and Procter & Gamble were strong enough to take the bluechip index positive.
Merck surged after the company said an advanced clinical study of its osteoporosis drug met its primary goals.
McDonald's also helped to resuscitate the index with a mid-day gain off positive expectations for its monthly sales numbers.
Intel, Hewlett-Packard and American Express fared worst of the bluechips.
In the home builders group, Lennar and Toll Brothers led the way higher, with a positive forecast from widely followed industry analyst Ivy Zelman helping.
"Our survey results give us added confidence that the housing market is in the early innings of a strong and sustainable recovery, with no apparent impact thus far from recent macro fears," Zelman said in a note to clients.
Infosys made a deeper-than-expected cut to its sales forecast on Thursday as global economic uncertainty took a toll on tech spending, sending its shares down 10 percent and slamming hopes for a second-half recovery.
The prevailing dim global economic climate, competition for a bigger share of the outsourcing business and sharp currency fluctuations have slowed the pace of growth for Indian outsourcing companies and in recent quarters Infosys has been underperforming key rivals.