Reports on initial jobless claims and durable goods orders contributed to investors' darker view of the economy. The reports followed the Federal Reserve's more cautious take on the economic recovery on Wednesday.
The Dow Jones industrial average fell more than 90 points in early afternoon trading. Broader indexes also fell.
Interest rates fell in the Treasury market as investors bought bonds, uncertain about stocks and opting for the smaller but safer returns of government debt. The yield on the 10-year Treasury note fell to 3.09 percent from 3.12 percent late Wednesday. Because the 10-year yield is a benchmark for interest rates on mortgages and consumer loans, rates on those loans are expected to fall as well.
The stock market saw losses across a variety of industries. Retailers were hit the hardest as investors worry about how much consumers will be able to spend without improvement in the job market. Home improvement store Lowe's Cos. fell nearly 3 percent and athletic apparel maker Nike Inc. dropped 3.7 percent. Online retailer Amazon Inc. was down 2.3 percent.
The latest economic reports showed there are "substantive holes in the economic recovery story," said Tom Samuels, portfolio manager of the Palantir Fund in Houston.
The Labor Department said initial claims for unemployment benefits fell to a seasonally adjusted 457,000 last week. That's slightly better than the 460,000 forecast by economists polled by Thomson Reuters.
However, initial jobless claims are still above levels that would signal employers are ramping up hiring. Claims have remained high in recent months. That is raising doubts about whether a strong, sustained recovery can occur without significant job growth.
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