NEW YORK (MarketWatch) -- U.S. stocks slumped on Wednesday, leading the market to its worst quarter since December 2008, as economic concerns continued to pile on.

A disappointing private-sector jobs report offset more upbeat manufacturing data ahead of Friday's monthly employment report.

"The economy is still in a tenuous state at best," said Bob Enck, president and CEO at Equinox Fund Management.

The Dow Jones Industrial Average DJIA, +1.19% fell 96.28 points, or 1%, to 9,774.02 on Wednesday.

The S&P 500 Index SPX, +0.82% fell 10.53 points, or 1%, to 1,030.71, while the Nasdaq Composite Index COMP, +0.74% fell 25.94 points, or 1.2%, to 2,109.24.

For June, the Dow industrials fell 3.6%, the S&P 500 fell 5.4% and the Nasdaq dropped 6.6%.

For the second quarter, the Dow lost 10%, marking its first drop after four straight quarters of growth. The S&P 500 and the Nasdaq fell 12% each during the quarter, with the two indexes posting their worst quarter since December 2008.

While corporate results have largely exceeded expectations, worries have mounted about the U.S. economic recovery, which has been hindered by a persistently high unemployment rate and a troubled housing market.

In recent weeks, Europe's ability to deal with its debt crisis and worries about a possible economic slowdown in China have plagued Wall Street.

On Wednesday, manufacturer 3M Co. MMM, +0.23% was the only gainer on the Dow, up 0.6%. Alcoa Inc. AA, -0.34% was the Dow's greatest laggard, off 2.7%.

For every stock on the decline nearly two were rising on the New York Stock Exchange, where more than 1.4 billion shares traded.

Data points

The Institute for Supply Management said manufacturing activity in the Chicago region slipped a bit in June, but remained at relatively high levels that still indicate overall expansion.

"Manufacturing remains the bright spot in the spotty economic recovery," noted Peter Boockvar, equity strategist at Miller Tabak, in an email.

A separate report Wednesday showed that companies added far fewer employees than anticipated in June after a revised 57,000 hike the month before. Read more about private-sector employment data.

"Lame is the first word that comes to mind as it compares to expectations of 60,000," wrote Boockvar, who noted, "We are in the midst of a third straight jobless recovery."

The ADP report rankled sentiment ahead of Friday's monthly jobs report from the Labor Department.

Signaling European banks might be in better fiscal shape than thought, the European Central Bank said Wednesday that it would loan financial institutions 131.9 billion euros, or $161.5 billion, for three months. Demand for the ECB cash proved less than expected, fueling optimism ahead of Thursday's deadline for banks to repay 442 billion euros in 12-month funds to the ECB.

Curbing enthusiasm some, Moody's Wednesday afternoon said it was putting Spain's triple-A rating on review for a credit downgrade.

The ratings agency was again "late to the party," remarked Boockvar, who noted S&P downgraded Spain from triple-A to AA-plus in January 2009 and then to double-A in April 2010.