Stocks rise on jobless claims, retail sales data

Stock prices slumped Thursday, erasing part of a surge earlier in the week, as investors braced for banking industry “stress test” results after trading ended as well today’s scheduled release of April job data.

Major market indicators dropped more than 1%, including the Dow Jones industrial average, which lost 102 points.

Stock futures turned higher late Thursday after the government released the stress test results, which were largely as expected. Regulators said 10 of the 19 big banks tested would have to increase a key measure of capital by a total of $75 billion so they could withstand losses if the economy were to worsen.

In regular trading, stocks were up early on upbeat indications about the job market and retail sales. But the market reversed course as some investors apparently decided to take profits after the Standard & Poor’s 500 index shot up 4.8% and the Dow gained 3.6% in the first three days of this week.

“With the rise we’ve seen lately there’s no sense leaving it all on the table,” said Dan Cook, senior market analyst at IG Markets.

The Dow ended Thursday down 102.43 points, or 1.2%, to 8,409.85, a day after the blue chips closed above the 8,500 level for the first time in four months. The index is down 4.2% for the year.

The S&P; 500 index fell 12.14 points, or 1.3%, to 907.39, and the Nasdaq composite index lost 42.86 points, or 2.4%, to 1,716.24.

The Russell 2,000 index of smaller companies dropped 2.4%.

Two stocks fell for every one that rose on the New York Stock Exchange.

“Today was a little dose of reality and maybe a little fear coming back into the market,” said Joe Saluzzi, co-head of equity trading at Themis Trading.

Financial stocks slid late in the session after weak demand at a Treasury auction forced the government to pay a higher-than-expected interest rate, raising concerns among investors about the government’s ability to borrow money to fight the recession.

In the secondary market, the yield on the benchmark 10-year Treasury note jumped to 3.29% from 3.15% late Wednesday. The yield on the 30-year bond climbed to 4.26% from 4.08%.

Shares of Wells Fargo sank 7.8%, JPMorgan Chase slipped 5.3% and U.S. Bancorp dropped 8.1%. But Bank of America climbed 6.5%, and Capital One surged 18%.

Technology shares tumbled after Symantec posted weaker-than-expected results. The security software maker’s stock dropped 15%.

Retailers were mixed even after many of them, including Wal-Mart Stores, reported better-than-expected April sales. Wal-Mart shares rose 0.8%.

The dollar was mixed after the European Central Bank cut its key interest rate a quarter point to 1%. Gold prices rose.

Oil futures rose 37 cents to settle at $56.71 per barrel on the New York Mercantile Exchange.

Overseas, key stock indexes rose 4.6% in Japan, 0.1% in Britain. But shares fell 1.6% in Germany and 1% in France.