Election Section

NEW YORK — Disappointing economic and earnings news, proof that companies still face challenges in the coming months, sent stocks sharply lower Thursday. The market was also wary about the government’s employment report due out Friday. 

“There are renewed fears about weakness in the economy. We believe the economy is bottoming, but we are not there yet,” said Alan Skrainka, chief market strategist at Edward Jones of St. Louis. 

The market was troubled by other labor data Thursday. The Labor Department reported that first-time claims for state unemployment benefits rose last week to a five-year high, a sign that employers’ need for workers continues to wane. 

The market’s losses were widespread, in keeping with the fact that most businesses have been hurt by the weakened economy and that many have been forced to lay off workers and slash prices. 

Computer makers suffered as analysts predicted demand would not pick up soon. Dell Computer, which was downgraded by UBS Warburg, fell $1.80 to $24.93. 

Analysts said investors chose to cash in some profits that they reaped in April after hearing companies say that the second quarter – rather than the first – will be the weakest of the year. 

“Everyone has been talking about a recovery being around the corner. But now we may have another disappointing earnings season for the second quarter, as well,” Skrainka said. 

The potential for more bad earnings news weighed on certain stocks, including Newell Rubbermaid and Papa John’s. 

Newell Rubbermaid fell $1.49 to $25.85 after announcing earnings that missed analysts’ expectations and also warning that second-quarter and yearly profits will also fall short. The housewares and consumer products maker also said it plans to cut 3,000 jobs. 

Although investors were worried about the economy, analysts were encouraged that the Dow managed to cut its losses in the last hour of trading.  

— The Associated Press 

They said the selloff moderated because investors also believe the earnings and economic data will compel the Federal Reserve to approve a bigger-than-expected rate cut — a 0.5 percentage point reduction vs. 0.25 percentage point — when it meets May 15. 

Analysts also reasoned that some pullback was expected after an April rally that was triggered by better-than-expected earnings and positive economic data. 

“Today was destined to be a hesitation day. It’s not overly bearish,” said Gregory Nie, technical analyst for First Union Securities. 

Thursday’s losses were minimal compared to the strides the market made in April. Most spectacularly, the Nasdaq has climbed about 31 percent from its closing low for the year, 1,638.80, reached April 4. 

“After a monthlong rally, the stock market is a little tired,” said Skrainka, the strategist at Edward Jones. 

Declining issues outnumbered advancers slightly more than 3 to 2 on the New York Stock Exchange, where consolidated volume came to 1.33 billion shares, below Wednesday’s 1.60 billion. 

The Russell 2000 index, which measures the performance of smaller companies stocks, fell 5.99 to 485.65. 

Overseas, stocks finished lower Thursday. Germany’s DAX index fell 2.2 percent, France’s CAC-40 slipped 2.1 percent, and Britain’s FT-SE 100 lost 2.2 percent. 

Financial markets in Japan were closed Thursday. 

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On the Net: 

New York Stock Exchange: http://www.nyse.com 

Nasdaq Stock Market: http://www.nasdaq.com