NEW YORK (AP) — U.S. stocks fell Thursday morning, promising another nerve-wracking day for investors who just endured one of the worst losses of the year.

The Dow Jones industrial average fell steadily throughout the morning and was down 89 points at 12,331 as of 11:15 a.m. It plunged 161 points the day before on concerns about Europe, marking its third-worst daily loss of the year. May will be the Dow's first monthly loss since September — another unwelcome milestone.

Stock index futures had climbed before the market opened after several big retailers including Target and Limited Brands reported healthy sales for May. Those gains evaporated after the government released discouraging news about jobs and economic growth.

The dismal month has been an unpleasant jolt after the gains in the first quarter, when investors wagered that Europe's financial troubles were, if not exactly solved, at least becoming more manageable. In the 21 trading days so far this month, the Dow has lost value on all but five. Its declines have wiped out nearly four-fifths of the gains made in the first three months of the year.

The Standard & Poor's 500 edged down eight to 1,305. The Nasdaq composite fell 22 points to 2,815.

News about U.S. stocks and bonds crimped the market, emphasizing the tenuous nature of any economic recovery here.

The government reported that claims for unemployment benefits rose to a five-week high, and that the economy grew more slowly than expected in the first three months of the year.

In bonds, the yield on the benchmark 10-year U.S. Treasury note fell to record low as investors flee the stock market and opt for low-risk bonds instead. The yield hit 1.54 percent in the morning, down from 1.62 percent the day before.

Caterpillar was the weakest stock in the Dow, down more than 3 percent in early trading. The machinery company is heavily dependent on China, and economists are concerned that the country, which has powered global economic growth as others have fallen into recession, is slowing down.

There was at least one encouraging sign in world markets. The yield on 10-year bonds for Spain fell to 6.4 percent after shooting as high as 6.7 percent on Wednesday.

That means investors are more confident in Spain's ability to pay its debt and aren't demanding as high an interest rate in return for investing in bonds issued by that country's government. Other countries like Greece and Portugal had to seek bailout loans after their borrowing costs rose above 7 percent, a level that many economists see as too high for a country to continue funding itself.

Debt-laden Greece has dominated the headlines out of Europe for much of the year, and investors are closely watching its elections on June 17 for signs of whether the country will keep using the euro or break away from the 16 other countries that do.

This week Spain has been the force that's rattling the market. The country announced Friday that it would have to spend nearly $24 billion to bail out a troubled bank, Bankia. On Thursday the European Union demanded that Spain provide more details about how it plans to finance an overhaul of its banking sector. Europe, which has already bailed out Greece, Ireland and Portugal, doesn't want to have to do the same for Spain as well.

Spain's size could make it an even bigger headache. Greece makes up 2 percent of the euro zone's economy; Spain 11 percent.

"Greece is a failed chemistry experiment," said Michael Strauss, chief investment strategist at the Commonfund investment firm in Connecticut. "But we are more worried about Spain because of its size and the scope."

Europe's debt crisis is sharpened by disagreement on whether spending more money or less is the best way to solve it. Stronger countries like Germany say governments need to cut spending. Weaker countries, already wracked by street protests whenever they try to cut any government services, say that will only make the problem worse.

In Ireland, residents voted on whether to accept a budget plan from the European Union. The plan would impose heavy budget cuts on the struggling country, a move that's sure to be unpopular among citizens who are used to generous government spending. But if Ireland rejects the EU's plan, its access to new bailout funds will be severely curbed. Results come Friday.