U.S. stocks fell on Thursday for the third day this week after data showed signs of slower growth ahead for the U.S. economy, while bearish technical signals added to doubts about the market's strength.
The S&P 500 broke below its 50-day moving average for the first time this year, suggesting the market's recent uptrend could be losing momentum, particularly after two days of sharp declines this week.
The Nasdaq 100 and the Russell 2000 indexes both have closed below their 50-day averages this week, adding to the overall technical pressure on the market.
Technology led the day's decline, with shares of eBay dropping 5.2 percent to $53.16, a day after issuing a disappointing earnings forecast for the second quarter. The S&P technology sector index shed 1.5 percent.
The CBOE Volatility Index, Wall Street's fear index, shot up 8.2 percent to 17.87. The VIX is up more than 45 percent for the week so far. It still remains well below its recent highs, but the gains could signal a change in the market trend.
"Right now, it's just simply an incremental move off the bottom, but I think the odds are pretty good, if one believes as I do, that we're going to have a market selloff ... that the VIX (could) get above 20 and into the 26 range, depending on how severe that selloff is," said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.
FACTORY ACTIVITY COOLS
More recent data on the economy has been less upbeat. On Wednesday, reports showed factory activity in the Mid-Atlantic region cooled in April and that the index of leading indicators, a gauge of future U.S. economic activity, fell in March for the first time in seven months.
The Dow Jones industrial average was down 77.89 points, or 0.53 percent, at 14,540.70. The Standard & Poor's 500 Index was down 10.79 points, or 0.70 percent, at 1,541.22. The Nasdaq Composite Index was down 43.08 points, or 1.34 percent, at 3,161.59.
After the close, earnings are expected from International Business Machines, Google and Microsoft. IBM's stock fell 1.1 percent to $207.34, while Google's shares lost 2.2 percent to $765.12. Microsoft's stock dipped 0.2 percent to $28.76.
Apple shares continued their slide from Wednesday.
The stock tumbled 2.9 percent to $391.19.
Volume has been heavier on negative days, as many investors have anticipated a pullback for some time after stocks' strong run to start the year, and are quick to book profits.
The S&P 500's moving average was also the floor of the trading range during the last month, making 1,543 a key technical support, according to Richard Ross, global technical strategist at Auerbach Grayson in New York.
"A close below 1,540 will generate a 'sell' signal as we transition into this period of weak seasonality," said Ross, noting that the S&P 500 has posted negative second quarters in the last three years. "The 50-day is the key."
DECLINES IN HEALTHCARE
The S&P 500's healthcare sector also experienced big declines, with UnitedHealth Group Inc down 3.4 percent at $59.94 after the insurer lowered its 2013 revenue outlook.
S&P 500 earnings are now expected to have risen 1.9 percent in the first quarter, up from the 1.5 percent estimate at the start of the month, based on actual results from 82 companies and estimates for the rest, according to Thomson Reuters data.
Of those that have reported, 72 percent have topped analysts' expectations, but only 43.9 percent have beaten revenue forecasts.