Wall Street tumbles on jobless data, Greece woes

NEW YORK (Reuters) - U.S. stocks tumbled at the open on Thursday after rating agencies said they might downgrade Greece's sovereign debt, reigniting worries over possible defaults in the euro zone, and an increase in jobless claims fueled concerns about the U.S. economy.

The selloff in equities was broad and deep, with the materials sector off 1.5 percent, information technology and energy down nearly 2 percent, and financials dropping 1.7 percent.

Moody's said a change in Greece's rating would depend on whether Athens could smoothly enact a fiscal reform plan, while Standard & Poor's said a downgrade by one or two notches in the next month was possible. That could increase borrowing costs and exacerbate Greece's problems.

Also weighing on sentiment, the government said the number of U.S. workers filing initial claims for unemployment benefits rose to 496,000. The higher-than-expected number came after disappointing consumer sentiment and house sales and prices data earlier this week.

"All morning, the market has been weak on (Moody's and S&P's) comments on Greece," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York. "You combine the weak economic data here, and you have further weakness."

Dow components Caterpillar Inc fell 3.3 percent $55.08, and JP Morgan Chase & Co lost 2.3 percent to $39.90. Aluminum producer Alcoa Inc dropped 1 percent $12.93, while Chevron Corp shed 1.7 percent to $71.13.

The Dow Jones industrial average dropped 145.18 points, or 1.40 percent, to 10,228.98. The Standard & Poor's 500 Index slid 15.76 points, or 1.43 percent, to 1,089.48. The Nasdaq Composite Index declined 30.52 points, or 1.36 percent, to 2,205.38.

(Reporting by Edward Krudy; additional reporting by Rodrigo Campos; editing by Jeffrey Benkoe)