Dow Closes Above 10,000… Barely

NEW YORK -Stocks buckled Thursday under the growing belief that the global economy is weaker than many investors expected and is likely to stop the U.S. labor market from rebounding in the coming months.

A flood of bad news, including rising debt levels in European nations and an unexpected jump in the number of Americans filing for unemployment benefits, had investors pulling money out of assets like stocks and commodities that are looking increasingly risky.

Demand for safe haven holdings like the dollar and Treasurys jumped as the euro tumbled. The Dow Jones industrial average fell about 270 points, and all the major indexes were down about 2 percent.

The day’s news reminded investors that the global economic recovery remains tenuous. It also raised questions about whether the market can resume its rebound from 12-year lows it hit last March. Investors were concerned that weakness in foreign economies could spill over to the U.S. and put more pressure on the job market.

The drop was similar to stumbles the market began having in mid-January. Stocks fell then in response to China’s attempts to curb its overheated growth. Those moves raised fears that the other world economies could suffer as a result. The pullback in stocks worsened as leaders in Washington said they would impose tighter regulations on U.S. banks.

The benchmark Standard & Poor’s 500 index fell 3.7 percent in January, its worst month since the market’s climb began last year.

The Labor Department said Thursday that claims for unemployment benefits rose by 8,000 to 480,000 last week. The news disappointed investors who had hoped for a drop. It was the fourth increase in the past five weeks.

The jobless claims numbers chilled expectations that the government’s January jobs report, due Friday, would show that employers added workers in the first month of the year. Analysts currently expect Friday report to show that employers added 5,000 jobs in January. The government is also expected to report that the unemployment rate ticked up to 10.1 percent from 10 percent.

U.S. trading also was affected by European markets, which dropped on concerns about onerous debt levels in countries including Greece, Spain and Portugal. The euro hit a seven-month low against the dollar on the news. The rising dollar hurt demand for commodities, which are priced in dollars and become more expensive to foreign buyers when the dollar climbs.

The concern about jobs and finances in Europe overshadowed improvements in U.S. worker productivity and an increase in factory orders.

Preliminary calculations showed, the Dow fell 268.29, or 2.61 percent, to 10,002.26. The day’s drop erased the market’s gains from the first two days of the week and put the psychological barrier of 10,000 back on investors’ radar. The Dow hasn’t fallen below 10,000 since Nov. 6.