Investing.com - U.S. stocks dropped on Thursday on concerns that labor costs are on the rise in the U.S. while fears that Argentina's default on its debts may roil markets with contagion fears adding to the selloff.
At the close of U.S. trading, the Dow 30 fell 1.88%, the S&P 500 index fell 2.00%, while the NASDAQ Composite index fell 2.09%.
The Volatility S&P 500 index, which measures the outlook for market volatility, was up 27.16% at 16.95.
Argentina earlier failed to agree to debt restructuring terms with creditors and fell into its second default since 2002, which sent stocks prices tumbling despite solid U.S. data.
Fears the Argentine default will roil markets already sensitive to conflict in Ukraine, Gaza and elsewhere in the Middle East bruised all three major indices.
Rising labor costs in the U.S. exacerbated the meltdown by reminding investors interest rates will go up in the U.S. possibly at a time when the global economy faces clouds on its horizon.
The Labor Department reported earlier that its employment cost index rose by 0.7% in the three months to June after a 0.3% increase in the first quarter. Economists had expected a 0.5% gain.
The Labor Department also reported that the number of individuals filing for unemployment assistance in the U.S. last week rose by 23,000 to 302,000 from the previous week’s total of 279,000. Analysts had expected jobless claims to rise by 22,000 to 301,000.
Hopes that Friday's July jobs will report will come in solid took a backseat to Argentine financial woes and fears of subsequent contagion.
Leading Dow Jones Industrial Average performers included Coca-Cola Company (NYSE:KO), down 0.80%, Microsoft Corporation (NASDAQ:MSFT), down 0.86%, and Procter & Gamble Company (NYSE:PG), down 1.02%.
The Dow Jones Industrial Average's worst performers included Exxon Mobil Corporation (NYSE:XOM), down 4.15%, American Express Company (NYSE:AXP), down 3.20%, and Nike Inc (NYSE:NKE), down 3.08%.
European indices, meanwhile, ended the day lower.
After the close of European trade, the DJ Euro Stoxx 50 fell 1.60%, France's CAC 40 fell 1.53%, while Germany's DAX fell 1.94%. Meanwhile, in the U.K. the FTSE 100 fell 0.64%.
On Friday, markets will move on the U.S. nonfarm payrolls and the unemployment reports, while the Institute of Supply Management is to release data on manufacturing activity.