Dawn Chorus: US stocks tumble as jobless filings rise

US stocks tumbled on Thursday, with benchmark indices closing at the lowest in a month, after surprisingly weak manufacturing and jobless data shook investor confidence, overshadowing a deal between Intel and McAfee.

In a broad selloff, the Dow Jones industrial average declined 144 points, or 1.4%, to 10,271. The broader Standard & Poor’s 500-stock index fell 18 points, or 1.7%, to 1,076, and the Nasdaq composite index closed 37 points, or 1.7%, lower at 2,179.

Financial, materials and industrial stocks all declined more than 2%.

In a fresh reminder of the slow pace of the recovery, the Labour Department said that initial claims for unemployment insurance rose last week by 12,000, to 500,000. Wall Street analysts had expected the seasonally adjusted claims to drop.

Adding to the gloom, the Federal Reserve Bank of Philadelphia’s monthly manufacturing index fell to minus 7.7 points in August from 5.1 points last month indicating a contraction in the sector in the mid-Atlantic states.

Concerns about the pace of economic recovery overshadowed the news that Intel was acquiring McAfee in a deal valued at $7.68 billion, a 60% premium over McAfee’s closing price on Wednesday. Intel shares dipped 3.5% as it said the transaction may slightly dilute earnings in the first year but McAfee surged 57.1%.

In another report, the Conference Board’s index of leading indicators, a compendium of forward-looking economic data, rose 0.1% in July, in line with expectations.

European stocks also declined on concern about the US economy with the benchmark Stoxx Europe 600 Index falling 1.4% to 254. France’s CAC 40 fell 2.1% and Germany’s DAX slid 1.8%. The UK’s FTSE 100 sank 1.7%.

Asian markets registered their fifth consecutive day of gains amid a fresh 30-month high for Mumbai stocks and Shanghai shares hitting a three-month peak.

Mumbai’s BSE Sensex climbed 1.1% to 18,455, supported by the outlook for robust domestic growth. Financials led the gains for the Shanghai Composite, which rose 0.8% to 2,688. The Hang Seng index in Hong Kong edged forward 0.2% to 21,072.