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NEW YORK (CNNMoney.com) -- Stocks slumped Thursday after comments from Fed chair Ben Bernanke on the banking sector and weak reports on economic growth and the jobs market revived worries about a recession.

The Dow Jones industrial average (INDU) lost 0.9% according to early tallies, while the broader Standard & Poor's 500 (SPX) index fell 0.9%. The Nasdaq composite (COMP) declined 0.9%.

Treasury prices rallied, sending yields lower, as investors sought the relative safety of government debt. Oil touched a record trading high above $102 a barrel, while gold was not far from all-time highs. The dollar hit another record low against the euro and also fell against the yen.

"We've been looking for signs that the financials are going to recover and then Bernanke said something scary today, that the problems in the banking sector will continue," said Peter Dunay, chief investment strategist at Meridian Partners.

He said that the comments were especially unsettling to Wall Streeters today because they coincided with the morning's weak reads on GDP and jobless claims, as well as the run up in oil and gold prices.

GDP. A revised reading of gross domestic product, the broadest measure of the nation's economic activity, showed fourth-quarter growth remained at the same tepid 0.6% rate initially reported. Economists surveyed by Briefing.com thought growth would be revised up to 0.8% in the quarter.

Jobless claims. Separately, the number of Americans filing new claims for unemployment rose unexpectedly to 373,000 last week from a revised 354,000 in the previous week. Economists expected 350,000 new claims.

The two reports added to worries that the economy is in a recession, or heading toward one.

Financials fall. The financial sector led the stock downturn after weak earnings from mortgage lender Freddie Mac and comments from Bernanke that while large U.S. banks will likely recover from the recent credit crisis, smaller, regional ones could fail.

Mortgage lender Freddie Mac (FRE, Fortune 500) reported a steeper-than-expected $2.5 billion fourth-quarter loss, due to the ongoing fallout from the housing market collapse. On Wednesday, Fannie Mae (FNM) posted a $3.6 billion quarterly loss. Shares of both Freddie Mac and Fannie Mae were little changed Thursday.

Thornburg Mortgage (TMA) slumped 13% in active trade after it said it has received margin calls - requests for immediate repayment of debt - on a portfolio of securities backed by less than top-tier mortgages. It has received these requests because the value of the debt has plunged between 10% and 15% since the end of January, the company said.

A variety of financial stocks slumped, including the Dow's five financial components: AIG (AIG, Fortune 500), American Express (AXP, Fortune 500), Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500) and JP Morgan (JPM, Fortune 500).

Bernanke on the Hill. In day two of his Congressional testimony, Fed Chairman Ben Bernanke maintained that the economy can avoid a recession, but acknowledged that the consumer is getting hit harder than in the last big slowdown in 2001, AP reported.

Recent reports have showed rising consumer prices and oil and gold prices are near all-time highs.

Bernanke was speaking to the Senate Banking Committee, following Wednesday's appearance before House legislators.

On both days, the Fed chief indicated that the central bank is likely to keep cutting interest rates due to the slowing economy, although the rise in inflation makes it a more challenging environment.

Investors have been worrying of late that the combination of sluggish growth and rising inflation will leave the economy in a dreaded environment of "stagflation," seen in the 1970s. Bernanke said that is not an environment that he anticipates and that the economy is nowhere near such a state, AP reported.

Separately, President Bush talked about why he opposes the recent foreclosure prevention legislation that Senate Democrats have introduced.

Company news. Sprint Nextel (S, Fortune 500) reported a fourth-quarter loss versus a profit a year ago and said it lost 100,000 subscribers in the quarter. The wireless provider also predicted it would lose 1.2 million subscriptions in the first quarter, more than what analysts were expecting. Shares fell about 10%.

On the upside, Apple (AAPL, Fortune 500) shares jumped after Tim Cook, the company's chief operating officer helped cool worries about the company's outlook. Speaking at a Goldman Sachs technology conference, Cook reiterated that Apple will meet its 2008 target of selling 10 million iPhones.

Metal and mining stocks rose as well, bouncing in response to the surge in gold prices. The Amex Gold Bugs (HUI) index climbed 2.4%.

Market breadth was negative. On the New York Stock Exchange, losers topped winners by more than 2 to 1 on volume of 1.46 billion shares. On the Nasdaq, decliners topped advancers 2 to 1 on volume of 2.06 billion shares.

Other markets. U.S. light crude oil for April delivery rose $2.95 to settle at $102.59 a barrel on the New York Mercantile Exchange, a record close. The price of oil also hit a record trading high of $102.97 a barrel during the session.

COMEX gold for April delivery rose $6.50 to settle at $967.50 an ounce.

Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.70% from 3.84% late Wednesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar touched a fresh all-time low versus the euro and also declined against the yen.