- Associated Press - Thursday, July 1, 2010

NEW YORK (AP) — Stocks began the third quarter with more selling after disappointing reports on jobs, housing and manufacturing raised more concerns about the economy.

The Dow Jones industrial average fell about 120 points in morning trading Thursday. The Dow and other major indexes lost more than 1 percent.

The weaker reports followed a bad second quarter for investors and came a day ahead of the government’s June jobs report. That’s an important date on investors’ calendars because a rebound in jobs is needed for the economy to recover.

The government said initial claims for jobless benefits rose by 13,000 last week to 472,000. Economists had forecast claims would fall. That comes a day after payroll company ADP said private employers didn’t ramp up hiring as much as expected last month.

Initial claims have remained well above the levels economists believe would indicate strong jobs growth. Many employers remain reluctant to hire because of worries about the pace of the economic recovery.

The market extended its early drop after the National Association of Realtors said the number of buyers who signed contracts to purchase homes fell to a new low in May following a rush of purchases to meet an April 30 tax credit deadline.

The Institute for Supply Management, an industry trade group, said its manufacturing index fell in June but that the sector still appears to be growing. The drop from May was steeper than analysts had expected.

In midmorning trading, the Dow fell 121.18, or 1.2 percent, to 9,652.84. The broader Standard & Poor’s 500 index fell 18.15, or 1.8 percent, to 1,012.56, and the Nasdaq composite index fell 47.61, or 2.3 percent, to 2,061.53.

The Dow fell 10 percent for the April-June quarter, while the S&P 500 index fell 11.9 percent.