Investors grew nervous about the shape of the economy Thursday, dumping stocks at the last minute ahead of a key government report on unemployment.
After a sleepy day of small back-and-forth trades, stocks began sliding in the last half-hour. The drop intensified in the final 20 minutes, and with fewer than two minutes until the closing bell, the Dow Jones industrial average was down nearly 103 points.
The index ended off its lows but still posted a loss of 87 points. The wave of selling swept through the market like a brush fire and revealed how skittish investors remain.
While traders offered various reasons behind the slide, each one suggested that investors remain on edge with worries about the pace of the economy's recovery. Now in the final month of the year, investors are eager to preserve the gains they've made in 2009. When a torrent of selling hits, many investors would rather just step out of the market.
"When you get a sell-off like that at the end of the day it tells me that there's no conviction in those buyers who are around," said Joe Saluzzi, co-head of equity trading at Themis Trading LLC. "The nervous Nellies are out there and everyone had itchy trigger fingers."
The unease came ahead of the Labor Department's November unemployment report, which is due before the start of trading Friday.
Worries about the economy dogged investors throughout the day following a weak snapshot of the service industry. The Institute for Supply Management said during morning trading that its index of activity in the service industry fell to 48.7 in November from 50.6 in October. That was below what analysts had been expecting and signaled contraction.
The market initially drew some support from a Labor Department report that new claims for unemployment benefits fell unexpectedly for the fifth straight week. The number of laid-off workers seeking unemployment benefits fell by 5,000 last week, in a hopeful sign of improvement in the job market. Economists had expected an increase, according to a survey by Thomson Reuters.
Meanwhile, Comcast Corp.'s agreement to buy a majority stake in NBC Universal for $13.75 billion gave some support to the Nasdaq composite index, which posted the narrowest loss of the major indexes. The long-awaited deal gives the nation's largest cable TV operator control of the TV network as well as several cable channels and a major movie studio.
The stock market's drop followed steep gains early in the week and mixed trading Wednesday. A surge in stocks has lasted nearly nine months and some analysts worry that the market's advance is outpacing gains in the economy.
There is broad agreement that a recovery in jobs is crucial for the economy to continue growing. Economists expect that employers cut 130,000 jobs last month and that the unemployment rate remained flat at 10.2 percent.
Dan Cook, senior market analyst at IG Markets, said he expects investors to hew toward safer investments as the end of the year approaches. He said he wasn't surprised to see the late drop ahead of the jobs figures.
"To avoid the chance of getting crushed tomorrow, take a bit off the table today," he said.
The Dow slid 86.53, or 0.8 percent, to 10,366.15, but is still down only 1 percent from a 14-month closing high on Tuesday. It had been up as much as 55 points early in trading and crossed the flat line 89 times before day's end.
The broader Standard & Poor's 500 index fell 9.32, or 0.8 percent, to 1,099.92, while the Nasdaq fell 11.89, or 0.5 percent, to 2,173.14.
Bond prices fell, pushing yields higher, as investors fretted about increasing supplies of government debt. The yield on the benchmark 10-year Treasury note rose to 3.38 percent from 3.32 percent late Wednesday.
The dollar mostly rose against other major currencies, while gold advanced.
Crude oil fell 14 cents to settle at $76.46 on the New York Mercantile Exchange.
Federal Reserve Chairman Ben Bernanke appeared on Capitol Hill for confirmation hearings for a second, four-year term. Bernanke told the Senate Banking Committee that he would work with lawmakers to reshape the country's financial regulatory setup as well as to rein in supports for the economy as a recovery takes hold.
Shares of Comcast rose 97 cents, or 6.5 percent, to $15.91. General Electric Co., NBC's parent since 1986, fell 7 cents to $16.
Bank of America rose 11 cents to $15.76 after announcing late Wednesday it would repay its $45 billion in government bailout money.
Two stocks fell for every one that rose on the New York Stock Exchange, where consolidated volume came to 4.9 billion shares compared with 4 billion Wednesday.
The Russell 2000 index of smaller companies fell 7.31, or 1.2 percent, to 588.78.
Overseas, Britain's FTSE 100 fell 0.3 percent, while Germany's DAX index lost 0.2 percent, and France's CAC-40 rose 0.1 percent. Japan's Nikkei stock average jumped 3.8 percent.