U.S. stocks fell on Thursday as manufacturing and labor market data heightened fears of a double-dip recession before Friday's key employment report.
Major indexes were lower for a fourth straight day after suffering their worst quarter since late 2008, but losses eased near the end of the session.
Right now everyone is so concerned about a major 'potential depression' or deflation taking place -- it's really roiling the market, said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
The Dow Jones industrial average <.DJI> dropped 41.49 points, or 0.42 percent, to 9,732.53. The Standard & Poor's 500 Index <.SPX> shed 3.33 points, or 0.32 percent, to 1,027.38. The Nasdaq Composite Index <.IXIC> lost 7.88 points, or 0.37 percent, to 2,101.36.
Investor attention appeared to move away from euro-zone debt concerns to U.S. economic data pointing to a slowing recovery as the euro rose over 2 percent against the dollar.
The focus is shifting back to us and, depending on what happens tomorrow, will have a tremendous impact on whether that focus stays on us or goes back to Europe, added Mendelsohn.
A Reuters survey found economists expect Friday's Labor Department report on June non-farm payrolls to show a decline of 110,000.
Gold mining company stocks were among the hardest hit on Thursday after being one the few strong sectors in the second quarter as the price of gold fell.
U.S.-listed shares of Barrick Gold dropped 5.2 percent to $43.06 and Newmont Mining Corp slid 4.5 percent to $59.99. The PHLX Gold/Silver Sector index <.XAU> fell 4.4 percent.
Indicators suggested markets were oversold, but fears of a worse-than-expected jobs report, exacerbated by Thursday's jobless claims data, kept buyers on the sidelines.
Thursday's data also included the Institute for Supply Management's barometer of U.S. manufacturing activity, which fell to its lowest level since December and pending home sales, which dropped a record 30 percent in May.
Other data showed unemployment claims rose unexpectedly last week, heightening fears a labor market recovery was stalling.
Ford Motor , up 4.9 percent to $10.57, was one of the bright spots after the automaker reported June sales gained 15 percent.
Volume was solid with about 11.65 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, above last year's estimated daily average of 9.65 billion.
Declining stocks outnumbered gainers on the NYSE by 1,839 to 1202, while on the Nasdaq, decliners beat advancers 1,754 to 903.
(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)