U.S. stocks faltered Thursday, following reports signaling a slowedown of global economic growth.
Investors were already disappointed that the Federal Reserve didn't take more action at the end of its two-day meeting Wednesday so the string of weak reports just added to an already pessimistic market.
The Dow Jones industrial average lost 38 points, or 0.3%. The S&P 500 lost 7 points, or 0.5%. The Nasdaq slipped 19 points or 0.7%.
A Chinese economic report showed just how much the roaring economies of Asia are slowing down. Chinese manufacturing fell to a seven-month low -- a sign that factories there are being hit by sluggish demand, according to the preliminary report of HSBC Manufacturing Purchasing Managers' Index.
Meanwhile, Europe's PMI index for June remained near a three-year low, as manufacturing output in Germany -- the most important European economy -- fell at the fastest rate in three years. It was the second straight month of decline.
The reports come one day after the Fed announced plans to extend its "Operation Twist" program, and made it clear that they remain concerned about the fragility of the U.S. economy. Investors weren't impressed.
"People are coming to the realization that the Fed is pretty much a sideshow to what the European Central Bank does," said Dan Greenhaus, head equity strategist at BTIG. "The Fed has become a slave to events rather than the dictator."
U.S. stocks closed mixed Wednesday following the Fed's announcement.
CNNMoney's own Fear and Greed index shows investors are less fearful, although still in fear territory. But the index had been in extreme fear territory until last week.
World markets: European stocks were mixed in afternoon trading. Britain's FTSE 100 slid 0.4%, but France's CAC 40 gained 0.3% and the DAX in Germany reversed earlier losses to edge higher 0.4%.
Eurozone finance ministers gathered in Luxembourg for a two-day summit.
The continent's leaders are facing pressure to announce new measures to combat their sovereign debt crisis, which remains of grave concern even after news that Greek politicians formed a coalition government led by a pro-bailout party.
Spain's bond auction of 2-, 3-, and 5-year bonds Thursday morning resulted in 2-year yields doubling from the prior auction, and sent yields for the 5- and 7-year notes also markedly higher. But the yield on the benchmark 10-year Spanish bond, which pushed past 7% earlier this week, fell to 6.5%.
Asian markets closed mixed after the China manufacturing report and in reaction to the Fed meeting. The Shanghai Composite lost 1.4% while the Hang Seng in Hong Kong was down 1.3%. But Japan's Nikkei gained 0.8%.
Economy: The Labor Department reported there were 387,000 first-time filings for unemployment benefits in the week ended June 16. That was little changed from the prior week but a bit above the forecast of 380,000 from the economists surveyed by Briefing.com.
Existing home sales for May came in slightly below expectations at an annualized rate of 4.55 million, according to the National Association of Realtors.
The Conference Board's Leading Economic Indicators index for May came in higher than expected increasing 0.3%, after decreasing by 0.1% in April.
The Philadelphia Fed's manufacturing index indicated a steep decline of 16.6% significantly worse than the 0.2% drop that economists predicted. A month ago that drop was 5.8%.
Companies: Shares of drugstore chain Rite Aid rose after it reported a loss of 3 cents a share, a bit better than the forecast of a 4 cent a share from analysts surveyed by Thomson Reuters, or the 7 cents a share it lost a year-earlier.
Shares of Bed Bath & Beyond sank more than 10%, after the retailer offered disappointing guidance for the current quarter after the bell on Wednesday.
Shares of open source software provider Red Hat fell 7% after it posted a better-than-forecast gain in earnings late Wednesday, but reported disappointing billings for the quarter.
Food maker ConAgra posted a better-than-expected increase in operating earnings, pushing shares higher. The company said fiscal-year profit would also rise more than current forecasts. But a charge related to its pension plans resulted in it reporting a net loss.
Cigarette maker Philip Morris International, which sells the brands of Altria Group such as Marlboro in overseas markets, cut its full-year earnings guidance, citing a bigger hit from currency exchange rates.
Dow component Johnson & Johnson is close to settling a probe with the Justice Department into the company's promotion of the antipsychotic drug Risperdal, which could include a payment of $1.5 billion, according to a report in the Wall Street Journal.
The payment would be the largest ever for the company, according to the report, but it would avoid a felony charge that could prevent the company from selling its medicines to government health programs such as Medicare. Shares of J&J were down.