Stocks Drop After Flood of Mixed Data

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Stocks fell at the start of the fourth quarter Thursday after a deluge of data painted a mixed picture of the economic recovery.

The Dow Jones Industrial Average was recently down 103 points at 9608.44, while the S&P 500 fell 1.2% and the Nasdaq Composite also shed 1.6%.

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The Institute for Supply Management's manufacturing gauge for September was at 52.6 compared to 52.9 in August. Economists expected a reading of 54. Construction spending unexpectedly jumped in August, driven by a resurgence in a housing industry enjoying a big government tax break. Total spending increased by 0.8% to a seasonally adjusted annual rate of $941.88 billion compared to the prior month. Wall Street had expected a flat reading.

The National Association of Realtors' index for pending home sales spiked 6.4% to 103.8 in August from 97.6 in July. The increase marks the seventh consecutive rise in pending home sales. Analysts surveyed by Dow Jones Newswires had expected pending sales would rise by 1.5%.

Before the bell, the Commerce Department reported personal income rose 0.2% compared to July while spending increased by 1.3%. A key gauge of prices slid, suggesting inflation is benign at the present time. Economists surveyed by Dow Jones Newswires had forecast a 0.1% increase in income during August and a 1.1% increase in spending.

Meanwhile, initial claims for jobless benefits rose 17,000 to 551,000 in the week ended Sept. 26, the U.S. Labor Department said in its weekly report. Economists surveyed by Dow Jones Newswires had expected a rise of only 5,000. The weekly jobs data were seen as a sign the labor market is still slow to heal.

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Auto sales data for September are also expected.

Federal Reserve Chairman Ben Bernanke is testifying on financial regulation, and, after the close, two more Fed speakers will discuss the economy.

Stocks weakened Wednesday on the final day of the third quarter, with the Dow Jones Industrial Average retreating 30 points, the Nasdaq Composite losing two points and the S&P 500 slipping four points. Weak economic data on jobs and a Chicago-area poll contributed to the bearish tone.

However, the stock market ended near its highs for the year, with many of the riskiest stocks leading the charge.

The technology sector will be in focus amid mergers and acquisitions activity. Cisco Systems reached a deal to buy Norwegian video-conferencing-services firm Tandberg for $3 billion, while Comcast denied a report it was going to buy General Electric's 80% stake in NBC Universal. Cisco shares were off 1.1% in recent action. Comcast shares fell 5.8%, while GE's shares were down 1.5%.

Bank of America will also be in the spotlight after its chief executive, Ken Lewis, said he'd step down at the end of the year. A replacement hasn't been named. The bank's shares were recently down 0.8%.

In the currency markets, the euro was particularly weak after Joaquin Almunia, the European Union's economics commissioner, said the euro group will discuss the euro's appreciation ahead of the G7 meeting in Istanbul. German retail sales also disappointed.

The Bank of Japan's key Tankan survey showed companies planning to cut capital spending, which sent the Nikkei 225 down 1.5%.

Oil futures held above the $70 a barrel.