NEW YORK?Wall Street stocks slumped on Thursday, ending a two-day rally as disappointing unemployment and industrial data rekindled worries about the recovery of the US economy.

The Dow Jones Industrial Average plunged 144.33 points (1.39 percent) to end at 10,271.21, recovering from almost 200 points down.

The tech-rich Nasdaq composite index declined 36.75 points (1.66 percent) to 2,178.95 while the broader S&P 500 index shed 18.53 points (1.69 percent) at 1,075.63.

Intel's announcement that it will acquire Internet security firm McAfee for $7.68 billion failed to stop the downward trend sparked by weak government unemployment data.

"The market is overwhelmed with the fear that we?ll fall into a double dip," said analyst Peter Cardillo of Avalon Partners.

The number of Americans filing new weekly claims for jobless benefits jumped unexpectedly to 500,000, the highest level in nine months, the Labor Department said, dashing expectations for a small improvement.

The claims in the week to August 14 increased by 12,000 from the previous week's revised figure of 488,000 and came well above most economists' expectations of 475,000.

It was the third straight week in which claims have risen, and underscores the threat posed by unemployment on the recovery from the worst US recession in decades.

US unemployment was at 9.5 percent, based on July figures. The government will release the monthly jobs reports in two weeks.

"This report indicates that the pace of firings and layoffs has increased and is a negative signal for the employment report in two weeks' time," said analyst Michael Gapen of Barclays Capital.

More disappointing data came in when the Federal Reserve of Philadelphia said manufacturing activity in the mid-Atlantic region has dropped during August.

The glum figures pile on top of a slew of negative reports in recent weeks showing that the pace of the recovery has slowed.

Wall Street was down for five straight days last week as investors' fears of a double-dip recession were heightened by the Federal Reserve's decision to revive crisis-era policies of cash injections into the economy.

Among the stocks in focus was McAfee, which jumped 57 percent following news of its acquisition by Intel Thursday.

Intel fell 3.22 percent while shares of McAfee rival Symantec gained 6.20 percent.

The bond market was up as investors sought safe investments.

The yield on the 10-year US Treasury bond was down to 2.579 percent from 2.641 percent Wednesday while that on the 30-year bond fell to 3.657 percent from 3.734 percent. Bond yield and prices move in opposite directions.