Markets lost few points last Thursday, but the S&P 500 posted its weakest weekly performance since December 16, 2011. It was the third straight loss for the Dow and S&P 500 on a day that recorded the lightest volumes in almost a month, while healthy quarterly results from Bed Bath and Beyond (NASDAQ:BBBY) helped Nasdaq to finish in the green. During the week, Spain showed trends of rising borrowing costs and European debt worries made a comeback, while domestic sentiment was adversely affected after Fed minutes dashed hopes of quantitative easing anytime soon. On a positive note, Thursday’s initial claims data showcased a declining trend, further brightening the labor market scenario.

The Dow Jones Industrial Average (DJI) lost 0.1% to close the day at 13,060.14. The Standard & Poor 500 (S&P 500) edged down 0.1% and closed Thursday’s trading session negligibly lower at 1,398.08. The tech-laden Nasdaq Composite Index ended at 3,080.50, after gaining 0.4%. The fear-gauge CBOE Volatility Index (VIX) moved up 1.6% to settle at 16.70. Ahead of Good Friday’s holiday on Friday, consolidated volumes were the weakest in roughly a month at 5.7 billion shares on the New York Stock Exchange, the Nasdaq and the Amex, sharply lower than last year's daily average of 7.84 billion. Decliners outnumbered the advancers on the NYSE, with 55% stocks declining as 42% gained. The remaining stocks were left unchanged.

Last Thursday, the U.S. Department of Labor reported that initial claims had dropped to a four-year low. The advance figure for seasonally adjusted initial claims was 357,000, for the week ending March 31, 6,000 lower than the revised figure of 363,000 for the previous week. The decline was in line with consensus estimates for the current period. The report painted another rosy picture of the labor market ahead of key nonfarm payroll data from the government that was scheduled for Friday. The report comes close on the heels of another in-line labor report from payroll processor Automatic Data Processing, Inc. (NASDAQ:ADP) released on Wednesday. According to the ADP National Employment Report, the private-sector added 209, 000 jobs from February to March on a seasonally adjusted basis.

However, encouraging labor market data failed to lift the benchmarks to the green, as European concerns remained an overhang on investor sentiment. Spain is the focal point for the moment as a poor showing during bond auctions rekindled fears about the European economy. 10-year bonds yields were up their highest levels since November last year, rising by 0.08% to 5.74%. Investors were also unsure about the nation’s ability to implement strict austerity measures in a scenario haunted by recessionary fears.

Spain not only played a part in Thursday’s development, but had started damaging the benchmarks since Wednesday. On that note, we now come to the developments of the week. Wednesday’s mood was largely gloomy after Spain’s yield on 10-year bonds jumped from 5.45% to 5.71%. US markets received a battering with benchmarks losing a minimum 1% each, thus paving way for a weekly decline. European nations including Ireland, Portugal, Greece and Italy have had to deal with surging borrowing costs not too long ago. Investors had witnessed the consequences of these hikes and every time something similar occurs, investors’ outlook about economic conditions takes a beating. The rise in Spain’s bond yield was far from the ‘unsustainable’ 7% mark, but was enough to spark off widespread concerns. Greece, Ireland and Portugal also had to seek financial aid when their borrowing costs reached unsustainable levels. Thus, anything similar happening to Spain is a matter of serious concern.

With these concerns continuing to be an overhang and causing serious damage to the markets, benchmarks ended in the negative zone for the week. The Dow, S&P 500 and the Nasdaq lost 1.1%, 0.7% and 0.4%, for the week. As already mentioned, S&P 500 had its worst weekly run since December 16, as also for this year till now.

Coming to sectoral stocks, telecommunications was one of the weakest performers and SPDR S&P Telecom (XTL) plunged 2.8%. Stocks including AT&T, Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), Clearwire Corporation (NASDAQ:CLWR), MetroPCS Communications, Inc. (NYSE:PCS) and Vodafone Group plc (NASDAQ:VOD) declined by 0.6%, 0.6%, 2.3%, 1.0% and 0.7%, respectively.