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Stocks fall after gloomy economic data

Stocks fell for a second straight day Thursday in volatile trading as investors were discouraged by economic data and focused on negative corporate news.

The Dow Jones industrial average was down 69 points at the close of trading, but off earlier lows. At one point in the afternoon the index was down as much as 136 points.

Concerns over European finances clouded the outlook, as Spanish government bond yields rose after a disappointing debt auction and French yields rose on rumors, later denied, that the country's credit rating may be downgraded.

Apple shares fell, weighing on the broader market.

Qualcomm Inc led technology stocks lower a day after it warned of trouble meeting demand for some of its chips, while Stanley Black & Decker led declines among industrials, the second-worst performing of the top 10 S&P 500 sectors.

The big declines came amid a strong beginning to earnings season, confirmed Thursday by better-than-expected reports from Bank of America Corp, Morgan Stanley, and eBay Inc.

According to the latest Thomson Reuters data, of the 105 S&P 500 components that have reported earnings to date, 81.9 percent have beaten analyst expectations.

"Despite the positive beat rate in earnings, some important economic data points have been losing momentum and that has to call into question whether or not this is just a soft patch or something more dramatic," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

"You overlay that with Europe again dominating the headlines... it just has investors standing on the sidelines," she said.

Raising concerns about the economic outlook, new weekly U.S. claims for unemployment benefits were above expectations, factory activity in the Mid-Atlantic region slowed sharply and home resales dropped in March for a second straight month.

eBay rose after hitting a 6-year high earlier in the session. The online auctioneer's sales and profit grew more than expected and it raised its 2012 forecasts.

Bank of America shares fell after spending the morning higher and Morgan Stanley rose after they both reported better-than-expected results.

Biotechnology companies prevented a bigger slump on the Nasdaq, as Human Genome Sciences Inc soared and Gilead Sciences Inc added gains.

Human Genome rejected an unsolicited $2.6 billion bid from long-time partner GlaxoSmithKline Plc.

Gilead's combination of experimental hepatitis C drugs, developed with Bristol-Myers Squibb Co, showed impressive results in a clinical trial.

Reuters contributed to this report.