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NEW YORK (Reuters) - Wall Street stocks dropped for a third day on Thursday, sagging under weak corporate profit reports that left the Dow Jones industrials index in the red for 2015, while strong U.S. labor market data supported a weak dollar.
Oil prices declined, with U.S. crude dropping below $49 per barrel for the first time in more than three months, as gold got a lift from the softer dollar and briefly traded above $1,100 an ounce.
Wall Street's Dow Jones industrial average .DJI ended off 119.09 points, or 0.67 percent, at 17,731.95, putting it in the red for the year.
The S&P 500 .SPX was down 12 points, or 0.57 percent, to 2,102.15 and the Nasdaq Composite .IXIC lost 25.36 points, or 0.49 percent, to 5,146.41.
Earnings worries drove activity. Caterpillar shares fell 3.6 percent to $76.88 and touched a four-year low. The world's largest construction and mining equipment maker reported sales declines in key markets in a sluggish global economy.
American Express fell 2.5 percent to $77.01 after its revenue missed expectations, while diversified manufacturer 3M was down 3.8 percent at $149.50 after cutting its full-year forecast.
"The initial take on big earnings reports has been lukewarm at best," said Bruce Zaro, chief technical strategist at Bolton Global Asset Management in Boston. "The strong dollar certainly has been mentioned a lot, and I think there are still questions about demand in the economy."
European equities were also stung by disappointing updates from companies, including Aberdeen Asset Management (ADN.L) and British energy supplier SSE (SSE.L). European stocks fell .FTEU3 0.5 percent.
In currency markets, the euro briefly traded above $1.10 for the first time in a week, as the Greek parliament signed off on reforms needed to start negotiations with lenders in a bid to avert bankruptcy.
The dollar index .DXY pared early losses on news that U.S. weekly jobless claims fell to their lowest level in more than four decades. It was last off 0.42 percent. The data made rate hikes by the Federal Reserve appear more likely.
The euro EUR= was last up 0.5 percent against the dollar at $1.0990 and 0.5 percent against the yen at 136.12 yen EURJPY=.
Worries over demand for commodities from markets such as China and the impact of an expected U.S. interest rate hike on emerging market capital flows have taken the shine off global markets.
Oil turned lower in volatile trading, after the dollar trimmed early losses and on concerns about shaky demand and ample global supply.
U.S. September crude CLc1 settled down 74 cents at $48.45 a barrel, the lowest settlement since March 31. Brent September crude LCOc1 was down 86 cents at $55.27, the lowest since April 2.
In metals, gold edged up from a five-year low, though bearish investors were still hovering. Gold XAU= was last off 0.30 percent at $1,090.20 an ounce.
U.S. Treasury long debt yields dropped to two-week lows as investors sought a safe haven from Wall Street's drop and slumping commodities prices. Benchmark 10-year Treasury notes US10YT=RR were up 14/32 in price to yield 2.2695 percent, from 2.325 percent late on Wednesday.
Additional reporting by Caroline Valetkevitch in New York; Editing by Dan Grebler