Fears of faltering global economy hit Wall Street

NEW YORK (Reuters) - Stocks fell on Thursday, led by losses in the technology sector, on concerns about the impact of a faltering global economy on corporate earnings.

Data showed initial claims for state unemployment benefits in the United States dropped to the lowest in four years, but that did little to alleviate concerns that a broader economic slowdown could chip away at corporate profits. Those worries have sent the S&P 500 down more than 3 percent since July 3.

Technology shares have been among the worst performers recently, bogged down by profit warnings from companies such as Advanced Micro Devices Inc and Applied Materials Inc . For the month, the S&P technology sector is down 4 percent and the PHLX semiconductor sector has shed 8.7 percent.

U.S.-listed shares of Infosys Ltd tumbled 11 percent to $38.94, after earlier dropping to an all-time low of $38.12. The Indian IT heavyweight cut its sales forecast more than expected as technology spending was hurt by global economic uncertainty.

The Dow Jones industrial average was down 61.46 points, or 0.49 percent, at 12,543.07. The Standard & Poor's 500 Index was down 11.33 points, or 0.84 percent, at 1,330.12. The Nasdaq Composite Index was down 37.46 points, or 1.30 percent, at 2,850.52.

Overall, market sentiment was weak, especially after the lack of any monetary easing by the Bank of Japan on Thursday, and few clues in the latest minutes from the Federal Reserve's June policy meeting, released on Wednesday. The lack of policy moves suggested major central banks were still cautious about the need for further easing.

A surprise rate cut in South Korea following a 50-basis-point cut by Brazil underscored the growing impact of sluggish growth worldwide.

"Risk barometers are flashing red following further central bank moves to couch the slowing global economy," said Andrew Wilkson, chief economic strategist at Miller Tabak & Co.

The CBOE Volatility index, Wall Street's so-called fear gauge was up 4.6 percent at 18.78.

Investors were looking to Friday's second-quarter gross domestic product data from world economic giant China for indications of the nation's economic health, in the wake of data in recent months showing its growth is losing steam.

A Reuters poll showed economists expect China's growth to have slowed to 7.6 percent in the second quarter, its worst performance since the 2008-2009 financial crisis. China's economy grew 8.1 percent in the first quarter.

Hotel operator Marriott International Inc reported a higher quarterly profit after the close on Wednesday but saw weakness in some international markets. Its share price slid 5.4 percent to $35.90.

Chevron Corp , the second-largest U.S. oil company, said late Wednesday second-quarter profit would be higher than the previous quarter as improved refining margins offset lower oil prices. Shares edged up 1 percent to $105.92.

Supervalu Inc plunged 43.7 percent to $2.98 after the third-largest U.S. supermarket chain suspended its dividend and said it was mulling options for overhauling the firm, including a sale.

Other economic data showed U.S. import prices fell last month by 2.7 percent, the most in more than three years, due to a plunge in the cost of imported oil, further icing inflation pressures.

(Additional reporting by Chuck Mikolajczak; Editing by Bernadette Baum)