Stock futures lower after jobs report

Stock futures are extending their decline as the June unemployment rate hit a 26-year high.

Overseas markets are also lower after a report showed unemployment in the 16 countries that use the euro rose to a 10-year high in May.

The reports reinforced concerns that any recovery in the global economy will take time.

The U.S. Labor Department's unemployment figures showed the jobless rate rose to 9.5 percent last month from 9.4 percent in May. Economists had predicted a rate of 9.6 percent.

Recession-weary employers cut a larger-than-expected 467,000 jobs in June, suggesting that the economy's road to recovery will be a bumpy one.

"This is part of the market recovery," said Roy Williams, CEO of Prestige Wealth Management. "You're going to get bad news."

Williams expects the unemployment rate is likely to reach 11 percent.

However, he noted unemployment is a lagging indicator and other recent data has shown the economy is beginning to improve. After the market's surge from March lows, Williams said data such as the jobless figures will give investors pause and sell stocks.

"Whenever you have runs like that, you have pullbacks before you can run again."

Ahead of the market's open, Dow Jones industrial average futures fell 119, or 1.41 percent, to 8,329. Standard & Poor's 500 index futures declined 12.90, or 1.4 percent, to 906.30, while Nasdaq 100 index futures fell 13.25, or 0.90 percent, to 1,465.50.

Investors will also get a reading on factory orders later Thursday morning. Orders to U.S. factories likely increased in May. Economists project factory orders rose 0.8 percent in May after a 0.7 percent increase in April. The Commerce Department will release the report Thursday at 10 a.m. EDT.

Markets kicked off the third quarter on Wednesday with gains after getting some reassuring data on manufacturing and housing. Traders were encouraged by a report showing more stable manufacturing activity and another indicating the fourth straight monthly rise in pending home sales. The Dow rose by 0.7 percent. The S&P gained 0.4 percent, while the Nasdaq composite index rose 0.6 percent.

Bond prices mostly rose early Thursday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.51 percent from 3.54 percent late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.17 percent from 0.16 percent late Wednesday.

The dollar mostly rose against other major currencies, while gold prices fell.

Overseas, Japan's Nikkei stock average fell 0.6 percent. In afternoon trading, Britain's FTSE 100 fell 1.8 percent, Germany's DAX index declined 2.6 percent, and France's CAC-40 fell 2.2 percent.