NEW YORK - Stocks began the third quarter with another loss after reports on jobs, housing and manufacturing raised investors' economic worries.

The Dow Jones industrial average fell nearly 42 points for its sixth straight loss but ended well off its lows ahead of the government's June jobs report. The report is critical because a rebound in jobs is needed for the economy to recover. The numbers are due before the start of trading Friday.

The weaker economic reports followed a bad second quarter for investors and added to the importance of Friday's snapshot of the labor market.

The government said initial claims for jobless benefits rose by 13,000 last week to 472,000. Economists had forecast a drop in claims. The report comes a day after payroll company ADP said private employers didn't increase hiring as much as expected last month.

The National Association of Realtors said the number of buyers who signed contracts to purchase homes fell to a new low in May following a rush of purchases to meet an April 30 tax credit deadline.

Meanwhile, the Institute for Supply Management said its manufacturing index fell in June but that industrial activity still appears to be growing. However, the drop from May was steeper than analysts had expected. Manufacturing has been one of the strongest parts of the economy in the past year so investors don't want to see it weaken.

There were pockets of strength in the market. Retail stocks mostly rose after a private equity firm disclosed that it purchased a 9.5 percent stake in BJ's Wholesale Club Inc. with the intention of taking it private. BJ's shares rose 17.6 percent.

Limited Brands Inc., parent of the Victoria's Secret and Bath and Body Works chains, rose 2.9 percent after Fitch Ratings raised its ratings on the company's credit.

The stock market has been sliding on concerns about the economy since hitting its 2010 high in April. Investors are worried that they were too quick to bet on a rebound after major indexes plunged to 12-year lows in March 2009. The reports Thursday provided more signals that the recovery will take longer than hoped.

John Canally, economist at LPL Financial in Boston, said traders were so scarred by the market's crash in 2008-09 that they see a slowdown as a sign that the economy is going to falter again rather than just recover more slowly.

"You see this almost every time 12-15 months after the end of a recession. You hit sort of a soft spot," Cannaly said.

Canally said the likelihood of a so-called "double dip," in which the economy begins to shrink again, has risen in the past month to about 20 percent from 10 percent. He said investors are far more pessimistic. "I would say the market is now over 50" percent, he said.

According to preliminary calculations, the Dow fell 41.49, or 0.4 percent, to 9,732.53. It was down as much as 152 points in late morning trading.

The broader Standard & Poor's 500 index fell 3.34, or 0.3 percent, to 1,027.37. The Nasdaq composite index fell 7.88, or 0.4 percent, to 2,101.36.