NEW YORK — Another bad signal from the job market and concern over a possible downgrade of British government debt sent stocks sharply lower Thursday.
Major stock indicators slid more than 1.5 percent, cutting nearly 130 points off the Dow Jones industrial average, after continuing claims for unemployment benefits set their 16th straight weekly record.
The report added to recent anxiety that the market may have moved too high too quickly on early signs of recovery in the economy.
Despite a pullback this week, the Standard & Poor’s 500 index is still up more than 30 percent from its 12-year lows in early March.
Investors were also worrying about how well governments can keep up with public spending to stimulate their economies after Standard & Poor’s said Britain may have its rating cut because of rising debt levels.
That would raise the cost of borrowing for the British government, which is taking a big role in bailing out that country’s stricken banking system.
Even with governments pumping huge amounts of money into economies around the world, there are still questions about how soon a rebound might take hold. In the U.S., home prices are still sliding and unemployment remains at a 25-year high.
“It raises questions about our own situation in terms of our deficits and our national debt,” Alan Skrainka, chief market strategist at Edward Jones, said of the S&P report. “There are limits to how high you can take these numbers longer term.”
The report weighed on bond prices. The yield on the 10-year Treasury note jumped to 3.35 percent from 3.20 percent late Wednesday.
The Dow fell 129.91, or 1.5 percent, to 8,292.13, after earlier falling as much as 201 points. The S&P 500 fell 15.14, or 1.7 percent, to 888.33, and the Nasdaq composite fell 32.59, or 1.9 percent, to 1,695.25.
Analysts say the market needs to see a continual stream of good news to draw in more buyers.
“The confidence-building is a process, and it’s begun,” said Gary Townsend, president and chief executive of Chevy Chase, Md.-based private investment group Hill-Townsend Capital. “Sometimes the market just needs a bit more time.”
Analysts also say a pullback is healthy in light of the markets’ two-month surge.
“A little bit of relief just makes sense,” said Ron Weiner, president and chief executive of RDM Financial in Westport, Conn. “People are starting to understand that all these taxes and stimulus are probably not going to lead to a great, roaring recovery, and some of these stocks may have gotten ahead of themselves.”
