Wall Street drops on weak jobless, manufacturing data

NEW YORK: US stocks fell on Thursday after data on jobless claims and regional manufacturing showed further signs of economic weakness, adding to concerns about the sustainability of a recovery.

Major US indexes dropped more than 1 percent after a report indicated factory activity in the US Mid-Atlantic region contracted in August to its lowest level in more than a year.

Stocks had opened lower after data showed weekly initial jobless claims rose to a nine-month high last week.

"If you don't want to call it a full double-dip (recession), you're certainly in a flat line now. And you're not seeing any growth," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

The Dow Jones industrial average slid 132.29 points, or 1.27%, at 10,283.25. The Standard & Poor's 500 Index was down 14.57 points, or 1.33%, at 1,079.59. The Nasdaq Composite Index dropped 26.53 points, or 1.20%, at 2,189.17.

The Nasdaq was also weighed by shares of chipmaker Intel Corp, which was down 3.4% to $18.91 after it offered to buy security software maker McAfee Inc for about $7.68 billion, or $48 per share. McAfee surged 58 percent to $47.21.

Sears Holdings Corp tumbled 7.2% to $62.44 after the department store group reported a wider-than-expected quarterly loss due in part on a lackluster performance by its Kmart discount chain.

Williams-Sonoma Inc fell 2.5% to $27.62, even after the upscale home goods chain posted a far stronger-than-expected quarterly profit and boosted its outlook.

August options are set to expire on Friday, which could generate more volume and amplify stock moves as traders adjust their hedges.