U.S. stocks fell on Thursday as data on jobs and manufacturing data added to recent lackluster economic figures, fueling fears about the recovery's strength.

The Standard & Poor's 500 index and Nasdaq were down 2 percent, while the Dow industrials were down 1 percent.

September manufacturing data and worse-than-expected jobless claims released before the bell overshadowed more positive reports on construction spending and pending home sales.

The Institute for Supply Management's manufacturing reading fell to 52.6, below economists' forecast of 54.0 and August's 52.9.

Heavy equipment maker Caterpillar , down 2.7 percent at $49.95, was among the Dow's biggest decliners.

Analysts said the news added to anxiety ahead of Friday's monthly jobs report from the government, the month's biggest data release.

Technology stocks were among the worst performers. Microsoft Corp fell 2.9 percent to $24.98 after Goldman Sachs removed the stock from its Americas Conviction Buy list, saying Microsoft may have one more soft quarter.

I think you were destined to see more selling today once the third quarter ended. The negative economic data only exacerbated the downward pressure, said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

The Dow Jones industrial average <.DJI> was down 143.82 points, or 1.48 percent, at 9,568.46. The Standard & Poor's 500 Index <.SPX> was down 19.39 points, or 1.83 percent, at 1,037.69. The Nasdaq Composite Index <.IXIC> was down 49.10 points, or 2.31 percent, at 2,073.32.

Stocks ended the third quarter on Wednesday with strong gains, though the market was down for the day after a surprising contraction in the Chicago PMI, an index of Midwest business activity.

(Editing by Jan Paschal)