Stocks slid in a broad sell-off on Thursday as a disappointing report on the labor market quashed hopes the economy was on the verge of recovery.

The slide in Wall Street coincided with a sell-off in other U.S. asset classes, including Treasury bonds and the dollar.

A reduced credit rating outlook for Britain also heightened investor concern that similar actions may loom elsewhere as governments around the world spend billions to revive growth.

Shares of big manufacturers dropped, with United Technologies Corp falling 2.5 percent to $50.45, while Boeing Co shed 3.3 percent to $43.10. The big U.S. aircraft maker left its full-year forecast unchanged on Thursday.

This market really has jumped on the basis that possibly

the recession could end sometime later this year or early next year, said Peter Lewis, fund manager at Murphy Capital Management, in Gladstone, New Jersey.

But we have to strip away the fact and realize these reports are still bad, and by no means is this market ready to take off.

The Dow Jones industrial average <.DJI> dropped 174.99 points, or 2.08 percent, to 8,247.05. The Standard & Poor's 500 Index <.SPX> fell 21.10 points, or 2.34 percent, to 882.37. The Nasdaq Composite Index <.IXIC> lost 41.85 points, or 2.42 percent, to 1,685.99.

Elsewhere, U.S. Treasuries plunged after the government said it would sell a massive amount of new debt next week, while the U.S. dollar earlier fell to its lowest level this year against a basket of currencies.

Investors also pummeled technology shares. Apple Inc was the Nasdaq's top drag, down 1.8 percent at $123.57. Tech companies' fortunes are closely linked to a growing economy. All but two of the Dow's 30 stocks lost ground.

U.S. government data showed ongoing claims rose to a fresh record as the recession battered employment, but the number of workers filing new claims for jobless aid declined 12,000 last week.

The Philadelphia Fed's survey of manufacturing conditions for the U.S. mid-Atlantic region contracted in May for the eighth straight month, but the deterioration improved slightly from April.

The economic data came one day after the U.S. Federal Reserve offered a more pessimistic view for economic recovery, deflating some of the optimism that had underpinned the stock market's recent rally from 12-year lows in early March.

The S&P rallied 37.4 percent from its bear market closing low in early March to a peak on May 8, but it has now retraced some of those gains amid concerns about the economy and a series of large secondary stock offerings from banks. The index is now up around 30 percent from its March 9 low.

(Reporting by Edward Krudy; Editing by Jan Paschal)

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