Stocks slipped on Thursday as manufacturing and other data suggested a slowing recovery, but shares were well off session lows as investors snapped up some beaten-down shares.
Major indexes were lower for a fourth straight day and after suffering their worst quarter since late 2008.
Shares of healthcare companies were among top decliners on the Dow, including Merck & Co Inc , down 2.9 percent at $33.95, along with financials. JPMorgan Chase & Co Inc was down 2 percent at $35.82.
Among top advancers were Microsoft , which lost 21 percent during the second quarter and 24.5 percent since the start of the year. The stock was up 0.7 percent at $23.17.
Ford Motor rose 4.8 percent to $10.56 after the automaker reported June sales gained 15 percent.
We've become increasingly oversold on a momentum basis, said Joe Arsenio, president of Arsenio Capital Management in Larkspur, California.
The Dow Jones industrial average <.DJI> was down 55.32 points, or 0.57 percent, at 9,718.70. The Standard & Poor's 500 Index <.SPX> was down 5.03 points, or 0.49 percent, at 1,025.68. The Nasdaq Composite Index <.IXIC> was down 13.30 points, or 0.63 percent, at 2,095.94.
Thursday's disappointing data came before the closely watched U.S. non-farm payrolls report due from the Labor Department on Friday.
Among Thursday's data, the Institute for Supply Management's barometer of U.S. manufacturing activity fell to its lowest level since December, while pending home sales dropped a record 30 percent in May.
Other data showed unemployment claims rose unexpectedly last week, heightening fears a labor market recovery was stalling.
In the second quarter, which ended Wednesday, stocks suffered their worst losses since the market meltdown triggered by the collapse of Lehman Brothers Holdings Corp.
(Additional reporting by Matthew Lynley; Editing by Kenneth Barry)