New York ? U.S. stocks fell sharply Thursday, with the Dow Jones Industrial Average shedding nearly 300 points after two days of gains, as investors reacted to gloomy data on the housing sector and the job market.

“Jobless claims surged and housing continues to slump. This is not good news for the economy and has caused the fear trade to come back,” said Kevin Giddis, managing director at Morgan Keegan & Co.

The Dow Jones Industrial Average dropped 283 points, or 2.4 percent, to end at 11,349, with 26 of its 30 components finishing in the red. Pacing the decliners, General Motors Corp. shares tumbled 11 percent.

The S&P 500 fell 29 points, or 2.3 percent, to 1,252, with the financial sector fronting the losses, down 7 percent. It was followed by consumer-discretionary issues, off 4 percent, and information technology, which lost 3 percent.

The economic news “provided a backdrop for the sell-off,” said Paul Nolte, director of investments at Hinsdale Associates.

On the New York Mercantile Exchange, crude-oil futures gained $1.05 to end at $125.49 a barrel.

The Nasdaq Composite lost 45 points, or 2 percent, to 2,280.

Volume on the New York Stock Exchange topped 1.6 billion, and declining stocks outran those advancing more than 4 to 1. On the Nasdaq, 1 billion shares traded, and decliners outpaced advancers 2 to 1.

The major U.S. stock indexes deepened their decline after the National Association of Realtors reported sales of existing homes in June fell to their lowest level in a decade.

Shares of home builders fell in the wake of the data, with Pulte Homes Inc. down 13.9 percent after the builder reported a quarterly loss of $158.4 million, and The Ryland Group Inc. fell 19.1 percent after the homebuilder late Wednesday reported a second-quarter net loss of $241.6 million.

“The list of reasons for the weakness is long,” said Mike Larson, real estate and interest rate analyst for Weiss Research. “Consumer confidence is down. Unemployment is up. Mortgages are harder to get now that lenders have found religion. And the broader economy has been decelerating. We’re also seeing long-term mortgage rates climb precipitously.”

That climb had mortgage rates spiking this week, with the benchmark 30-year, fixed-rate loan soaring more than a quarter percentage point to a national average of 6.63 percent, its highest level in nearly a year, said Freddie Mac.

Investors started the day with glum news after the government reported a large rise in first-time jobless claims, which jumped 34,000 to 406,000 in the week ended July 19.

The economic data helped lift Treasury prices while denting stocks and the dollar, although some market observers downplayed the increase in initial claims.

At a hearing on Capitol Hill, Timothy Geithner, head of the Federal Reserve Bank of New York, said the financial system’s ability to withstand stress should improve by the end of the year.