Markets closed lower Thursday as economic reports in the United States left investors wondering about the health of the economy. The S&P/TSX composite index closed 25.01 points lower at 7,078.48.

The heavily weighted financial index dropped 0.6% and the information technology sector fell 1.5%

Royal Bank of Canada fell 44¢ to $59.10, while CIBC fell 47¢ to $53.40.

Shares of Domtar and Tembec Inc. posted gains after the firms announced they are merging their timber and softwood lumber operations in a move they say will create the fourth-largest wood company in North America.

Domtar rose 44¢ to close at $15.35. Tembec shares added 31¢ to finish at $7.40.

The S&P/TSX Venture composite index closed down 2.68 points at 1,113.42/ Trading was heavy on a volume of 42.5 million shares worth $18.9 million dollars, with 229 advances, 223 declines and 498 issues unchanged.

In New York, stocks slumped on after a report said manufacturing in the Mid-Atlantic region had not picked up in June by as much as some investors had expected.

The Federal Reserve Bank of Philadelphia said its index of factory business conditions rose to 4.0 in June from negative 4.8 in May — marking the first month of growth since February and registering slightly above forecasts of 3.3.

A sharp gain in the neighboring New York Fed’s factory survey earlier this week, however, had heightened speculation that the Philadelphia number might come in even higher.

There was one positive report for the day — the U.S. Conference Board’s index of leading economic indicators rose a better than expected 1% in May.

The Dow Jones industrial average fell 114.27 points to 9,179.53, while the S&P 500 was down 11.16 points to 998.93.

The tech-heavy Nasdaq composite index lost 28.55 points to 1,648.59.

The Canadian dollar recovered from a sharp drop Thursday morning to close at US74.45¢, down 0.38 of a cent.

The dollar fell after Bank of Canada governor David Dodge forecast a very weak second quarter and continuing softness in the Canadian economy in the third quarter.