Stocks fell sharply Thursday as investors grew more concerned about economic weakness in the U.S. and Europe.

The Standard & Poor's 500 index sank 2.6 percent, bringing it 10 percent below its recent high of 1,363 reached on April 29. A decline of 10 percent is considered to be a market correction. The Dow Jones industrial average is now down more than 1,000 points from July 21.

The U.S. government said before the market opened that the number of people who applied for unemployment benefits for the first time edged only slightly lower last week to 400,000. That's still above the 375,000 level that economist say indicates a healthy job market. It was the latest indication of weakness in the U.S. economy.

European stocks fell broadly because of concerns that Italy or Spain may need help from the European Union. The benchmark stock indexes in Italy, Germany and England each fell 3 percent.

"We are continuing to be bombarded by worries about the global economy," said Bill Stone, chief investment strategist at PNC Financial. Some traders are selling ahead of Friday's employment report, which is expected to show that unemployment remained at 9.2 percent last month. A rise in the unemployment number would likely push stocks lower again.

Thursday started as another big sell-off on Wall Street. The Dow Jones industrial average fell 244 points, or 2 percent, to 11,652 in late morning trading. The S&P 500 lost 29, or 2.6 percent, to 1,231. The Nasdaq composite shed 71, or 2.6 percent, to 2,621.

Investors poured money into investments that are seen as relatively safe places to park cash when markets are turbulent. Gold rose 1 percent to $1,680 an ounce. The yield on the 10-year Treasury note fell to 2.52 percent, its lowest level of the year. Bond yields fall when demand for them increases.

Companies that make most of their profits when the global economy expands fell the most. Caterpillar, Alcoa and Chevron led the Dow lower with losses of nearly 4 percent each. Kraft Foods was the only company among the 30 stocks in the Dow to rise. Kraft rose 2 percent after the company said that it plans to split into two. One company will focus on snacks such as Oreo cookies and the other will target the North American grocery business.

All 10 industry groups in the S&P index fell. Energy, financial and industrial companies each lost 2 percent or more.

Stock trading has been volatile this week because of concerns that the U.S. economy is weakening. Manufacturing, consumer spending and hiring by private companies are below levels that are consistent with a healthy economy.

General Motors Co. fell 2 percent despite beating analyst estimates. CVS Caremark fell nearly 4 percent after its revenue slipped last quarter.

Several national retailers are announcing July sales results throughout the day. Target, Gap Inc. and Macy's each fell by more than 1 percent, in part because of concerns that consumers would further cut back shopping if the economy continues to slow down.

The Dow rose 30 points Wednesday _ after being down 166 _ to break an eight-day losing streak. Nine days would have been the longest since February 1978. The S&P 500 index rose 6 points and broke a seven-day streak.