Wall Street stocks tumbled Thursday after weaker-than-expected unemployment data and public debt worries clouded the outlook for recovery from the prolonged recession. The Dow Jones Industrial Average of 30 blue-chip stocks sank 129.91 points (1.54 percent) to finish at 8,292.13. The tech-rich Nasdaq dropped 32.59 points (1.89 percent) to 1,695.25 and the broad-market Standard & Poor's 500 index shed 15.14 points (1.68 percent) to 888.33. Charles Schwab & Co. analysts said news that Britain may lose its top AAA credit rating because of ballooning debt delivered a painful reminder of the depth of the global recession. “Markets were forced to consider the impact of deteriorating financial positions for many of the world's largest governments,” the analysts said. International ratings agency S&P said it had downgraded its outlook on Britain's economy, to “negative” from “stable,” because of the country's “deteriorating public finances.” The Labor Department reported that new claims for unemployment benefits fell to 631,000 in the past week, slightly worse than expected by most analysts. Continuing claims for jobless benefits rose by 75,000, pushing the insured unemployment rate to 5.0 percent for the first time since December 1982. “The trend in continuing claims is worrisome on a number of levels, but the most important factor in terms of the economy is that it continues to be an impediment for a pickup in consumer spending and a recovery in the housing market,” said Patrick O'Hare at Briefing.com. A rebound in consumer spending and the devastated housing sector is considered key to snap the world's largest economy out of recession that began in December 2007. Investors shrugged off an unexpected rise in the Conference Board's index of leading US economic indicators in April, the first increase in seven months. In Europe, Germany's DAX was down 108.45 points, or 2.2 percent, at 4,930.49 while France's CAC-40 fell 79.86 points, or 2.4 percent, to 3,223.51. The FTSE 100 index of leading British shares slumped 109.69 points, or 2.5 percent, to 4,358.72. Industrial stocks suffered sharp losses. Heavy-equipment maker Caterpillar was the Dow's biggest loser, sliding 4.72 percent to $35.54, while aluminum giant Alcoa shed 4.11 percent to $9.10. In the banking sector, two regional banks deemed insufficiently capitalized by US authorities suffered heavy losses after attempts to raise capital. Regions Financial plunged 16.16 percent to 4.10 dollars and Fifth Third Bancorp dropped 9.86 percent to $6.95. Boeing fell 2.89 percent to $43.29 after confirming the calendar for the launch of its 787 Dreamliner plane, with a maiden test flight due by the end of June, and said it is on the lookout to buy defense firms. Among the gainers, ailing General Motors skyrocketed 32.41 percent to 1.92 dollars. The United Auto Workers union said it had reached a “tentative understanding” with GM and the US Treasury on contract changes aimed at averting bankruptcy at the government-rescued auto giant. Trading volume was thin ahead of the three-day weekend, with financial markets closed Monday for the Memorial Day holiday. Bonds fell sharply amid the credit rating worries.
