So are they smoking dope on Wall Street?

WASHINGTON (MarketWatch) -- Three disappointing, forward-looking reports on the U.S. economy drove investors away from stocks and back into bonds on Thursday, fearful that the economy could stagnate or fall back into recession.

Thursday's releases -- initial jobless claims, leading economic indicators and the Philly Fed index -- were only the latest in a series of reports showing the economic momentum flagging. Of this week's indicators, only one -- industrial production -- showed any growth, and that was due to special factors unlikely to be repeated.

Here's what we learned on Thursday:

Jobless claims ticked higher to the psychological threshold of 500,000, a nine-month high. See full story on jobless claims.

The leading economic indicators increased 0.1% in July, but have been essentially flat since March. See full story on the leading indicators.

And, worst of all, the Philadelphia Fed's survey manufacturing firms indicated that more firms say their business is worsening than say it's improving. See full story on the drop in the Philly Fed index.

Manufacturing has been the backbone of the recovery so far, so if the weakness in the Philly region expands nationally, the economy could stumble.

The headwinds holding back the economy are strengthening just as impact of the inventory cycle and the stimulus are fading. Unless the economy can find its second wind soon, a self-reinforcing downturn could be inevitable.

With Congress paralyzed, the burden of supporting the economy further -- or not -- will fall to the Federal Reserve. Odds are mounting that the Fed will redouble its efforts to pump money into the economy via quantitative easing.