Business

NEW YORK (AP) ― Wall Street extended its decline Friday after readings on jobs, manufacturing and construction indicated that businesses and workers still face a tough U.S. economy.

A massive quarterly loss at General Motors Corp. also gave investors reason to trade cautiously.

Friday's economic reports were not as poor as many economists had anticipated, but they were nonetheless gloomy. The Labor Department said jobs fell for the seventh straight month in July and the unemployment rate rose to 5.7 percent. The report arrived after data Thursday showing an unexpected jump in jobless claims.

"It reinforces the idea that we're seeing a steady, but not dramatic, decline in employment, which is likely to last for some time," said Michael Sheldon, chief market strategist at RDM Financial Group in Westport, Conn.

The Commerce Department also reported Friday that building activity declined in June, while the Institute for Supply Management said manufacturing activity was flat. Given Thursday's disappointing report on gross domestic product growth, Wall Street is becoming more certain that the United States is in a recession — and one that could be prolonged. U.S. recessions since World War I have lasted about 10 months, on average, but have ranged from as little as six months to as long as 16 months, Sheldon said.

The flagging economy has sapped consumers' ability to spend freely, which in turn is hurting profits at many big companies. GM said it lost $15.5 billion in the second quarter, more than analysts predicted and the automaker's third-worst loss in its history.

In midafternoon trading, the Dow Jones industrial average fell 44.86, or 0.39 percent, to 11,333.16.

Broader stock indicators also lost ground. The Standard & Poor's 500 index fell 5.84, or 0.46 percent, to 1,261.54, and the Nasdaq composite index fell 12.89, or 0.55 percent, to 2,312.66.

Declining issues narrowly outnumbered advancers on the New York Stock Exchange, where volume came to a light 925.5 million shares.

Light, sweet crude rose 93 cents to $125.01 a barrel on the New York Mercantile Exchange, after shooting up as high as $128.60.

Bond prices edged higher. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.94 percent from 3.95 percent late Thursday. The dollar was mixed against other major currencies, while gold prices fell.

Shares of GM, one of the Dow industrials, gave up 73 cents, or 6.6 percent, to $10.34 after posting its quarterly loss.

Another drag on the stock market was Nortel Networks Corp. The Canadian telecommunications equipment maker reported a wider second-quarter loss, and its stock fell $1.12, or nearly 15 percent, to $6.52.

Financial stocks performed well overall, however. Investors are cautiously optimistic that banks and other financial services companies, while still losing money on their hefty investments in troubled debt, are starting to clean up their books.

Bond insurer Ambac Financial Group Inc. said it agreed to pay $850 million to settle one of its largest exposures to risky debt instruments called collateralized debt obligations. Ambac rose $1.01, or 40 percent, to $3.53, while rival MBIA Inc. rose $1.32, or 22 percent, to $7.25.

Other gainers included JPMorgan Chase & Co., up 37 cents at $41 and American International Group, up 72 cents, or 2.8 percent, at $26.77.

Most companies' quarterly results have been surpassing Wall Street's forecasts. And beyond financial and consumer discretionary sectors, corporate earnings have been increasing.

"There is some room for optimism on the corporate profit front," Sheldon said. "But a lot will depend on consumers and energy prices for the remainder of the year."

A few pharmaceutical stocks suffered sell-offs on Friday. Biogen Idec Inc. and Elan Corp. PLC fell due to safety concerns related to multiple sclerosis therapy Tysabri. Biogen dropped $18.02, or nearly 26 percent, to $51.74, and Elan tumbled $9.08, or 45 percent, to $10.97.

The Russell 2000 index of smaller companies rose 1.61, or 0.23 percent, to 716.13.

Overseas, Japan's Nikkei stock average fell 0.14 percent. Britain's FTSE 100 fell 1.06 percent, Germany's DAX index declined 1.28 percent, and France's CAC-40 fell 1.78 percent.

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