US Stocks Fall In Early Trading As Growth Worries Persist; DJIA Off 164

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• AUGUST 4, 2011, 9:39 A.M. ET

US Stocks Fall In Early Trading As Growth Worries Persist; DJIA Off 164

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--Weekly jobless claims show little change to weak U.S. employment

--Stocks futures swing as ECB's Trichet says downside risks "may intensify"

--Japan's currency intervention fails to lift Asian, European markets

--Kraft to split company into two publicly traded companies, shares gain

   By Brendan Conway 
   Of DOW JONES NEWSWIRES 
 

NEW YORK (Dow Jones)--U.S. stocks swung lower in volatile trading early Thursday, after data showing little change to jobless benefits claims last week failed to assuage investor concerns over a slowing economy.

The Dow Jones Industrial Average lost 164 points, or 1.4%, to 11738 in early trading. The Dow had closed up 30 points on Wednesday, rallying nearly 200 points off the intraday low to halt its losing streak at eight sessions. Standard & Poor's 500-stock index lost 18 points, or 1.4%, to 1242 and the Nasdaq Composite slumped 44 points, or 1.6%, to 2649.

Markets were primed for another volatile session. The euro swung and U.S. stock futures followed before the open as European Central Bank President Jean-Claude Trichet said the downside risks to growth may intensify, reflecting investor worries over the health of the global economy.

Markets then pared losses amid reports that the European Central Bank bought Portuguese and Irish sovereign bonds. Trichet said in a press conference bond-buying efforts were never "dormant" and that bond buying is an ongoing program."

In the U.S., the number of initial claims for jobless benefits during the latest week fell by just 1,000 to a seasonally adjusted 400,000 in the week ended July 30, the Labor Department said Thursday.

The four-week moving average of new claims, considered a more reliable indicator of the labor market's recent performance, fell 6,750 to 407,750. Economists generally think the economy is adding more jobs than it is shedding once the weekly claims figure falls below the 400,000 level. That hasn't happened since early April. A previous reading below 400,000 was revised back above that number.

Earlier, Japan intervened in currency markets to stabilize the yen, which has risen as investors shift into currencies considered safer assets. But the move to calm markets wasn't enough to distract investors from growing concerns over a slowing economy.

Asian markets ended mostly lower, but Japan's Nikkei Stock Average rose slightly on the Bank of Japan intervention, which gave exporters a lift. Europe bourses were broadly lower, with the Stoxx Europe 600 down to its lowest level in nearly a year.

The U.S. dollar surged nearly than 3% to a three-week high against the yen, and also gained against the euro.

Gold futures leapt to nearly $1,682 an ounce, after settling at a record on Wednesday. Crude oil futures slipped to $91.46 a barrel in recent trading.

In corporate news, investors digested monthly same-store sales results from a slew of retailers. Same-store sales across the sector grew 4.4% in July, which was in line with analyst expectations, according to data compiled by Thomson Reuters.

Kohl's fell 4.3% after the retailer said July sales at stores open at least a year fell 4.6%, calling those sales "disappointing."

Saks gained 1.3%. The luxury retailer reported July same-store sales that surged above analysts' estimates, the third consecutive month results on that basis exceeded expectations and further highlighting the rebounding luxury segment.

Kraft Foods surged 7% after the blue chip company said it would split into two publicly traded companies and lifted its full-year earnings outlook.

General Motors shed 2% despite the auto maker's net income nearly doubling for the second quarter, as revenue surged.

Zipcar climbed 10% after it projected third-quarter revenue above current forecasts.

Fortress Investments shed 0.8% after the private-equity and hedge-fund manager's second-quarter loss widened, with chief executive Daniel Mudd pointing to a "challenging" quarter for some of the company's funds.

Dendreon tumbled 64% after the company said sales of its prostate cancer drug Provenge were growing slower than expected, and that it planned to cut jobs to reduce costs.

Southwest Airlines shed 2.1% after saying Thursday that it will freeze or shrink capacity next year, highlighting the pressure on U.S. carriers to keep boosting revenue to offset higher jet fuel prices.

-By Brendan Conway, Dow Jones Newswires; (212) 416-2670; brendan.conway@dowjones.com