Brutal selloff on Wall Street
Dow loses 345 points as mixed retail sales reports, weak job market news and an oil price slide magnify fears about a global slowdown.
NEW YORK (CNNMoney.com) -- Stocks plummeted Thursday, with the Dow plunging around 345 points as mixed retail sales, lower oil prices and dour labor market readings amplified worries about a global economic slowdown.
The concerns overshadowed a better-than-expected sales report from Wal-Mart Stores and surprisingly strong readings on productivity and the services sector.
The Dow Jones industrial average (INDU) lost 345 points, or 3%. It was the fourth-biggest one-day decline on a point basis this year and the third-worst day on a percentage basis.
It was the 51st session in 2008 in which the Dow posted triple-digit losses, according to Dow Jones. That's the worst record for the blue-chip barometer since 2002, when the Dow declined at least 100 points 67 times during the year.
The big daily swings this year reflect the markets' volatility amid the uncertainty concerning the economy and financial sector.
The broader Standard & Poor's 500 (SPX) index fell 3.2% and the Nasdaq composite (COMP) lost 3%.
Small caps got pummeled too, with the Russell 2000 (RUT) index plunging 3%.
Friday's focus will be the August employment report from the government. But economists don't expect a job market turnaround anytime soon. (Full story).
Investors have come back from Labor Day and the summer to find that few of the negatives have changed, said Gus Scacco, managing director at AG Asset Management.
"The market is looking out and trying to discount six months from now, but all the same issues are still there," he said. "And now there's more of a realization that global growth has slowed. That's become a front-burner issue."
Stocks were mixed Wednesday as falling oil prices, a sluggish economic reading from the Federal Reserve and weak sales reports from many automakers added to recession fears. Such concerns were magnified Thursday by the retail sales reports and economic news.
"I think the economy is really weak and this bear market is a correct reflection of that," said Len Blum, managing director at Westwood Capital.
He said that whether it meets the technical definition of a recession or not, the current environment feels like a recession and it's being led by the consumer.
"Consumers are getting hit on a lot of fronts," he said. "They're getting crushed at the grocery store and the gas pump, they can't borrow and the labor market is weak."
A lot of those realities were reflected in the day's news.
Adding to the gloom and doom in the afternoon: comments from two Fed officials that reiterated the central bank's dour forecast. Dallas Fed president Richard Fisher discussed anemic growth. San Francisco Fed president Janet Yellen said that the credit crunch is severe and deepening and that the housing market has not bottomed yet.
Additionally, bond manager Bill Gross stated in a commentary on the PIMCO Web site that the Treasury needs to step up its efforts to help Fannie Mae and Freddie Mac and to rescue the housing industry.
Wal-Mart: The world's leading retailer reported stronger-than-expected August sales at its stores open a year or more, a metric known as same-store sales. Sales rose 3% versus forecasts for a rise of 1.6% and included the critical back-to-school period. (Full story)
Wal-Mart (WMT, Fortune 500) shares ended the session barely lower.
Other retailers: While Wal-Mart and select other discount retailers benefited from the need for a strapped consumer to still buy essentials, mall-based clothing chains and high-end sellers suffered.
Clothing chain Abercrombie & Fitch (ANF) said sales fell 11%, versus forecasts for a 7.9% drop. Shares slumped 6.8%. Pacific Sunwear of California (PSUN) reported a decline of 6%, shy of forecasts for a drop of 8.8%. Shares dropped 4%.
On the high end, Saks (SKS) said same-store sales fell 5.9% versus forecasts for a drop of 4.7%. Shares were little changed. Nordstrom (JWN, Fortune 500) said same-store sales slumped 7.9%, worse than the 7.1% consensus. Shares slipped 4%.
Jobs: The number of Americans filing new claims for unemployment jumped unexpectedly last week, rising to 444,000 from a revised 429,000 the previous week, the government said. Economists surveyed by Briefing.com thought claims would fall to 420,000 last week.
A separate report from payroll services firm ADP showed that the private sector lost 33,000 jobs in August, eclipsing forecasts for a drop of 30,000.
The report can sometimes be a harbinger of the broader government-issued monthly employment report, due Friday. Employers are expected to have cut 75,000 non-farm jobs from their payrolls, after cutting 51,000 in July. The unemployment report, generated by a separate survey, is expected to hold steady at 5.7%.
Other economic news: Other reports were more positive. Second-quarter productivity was revised up to a 4.3% annualized rate from an initial rate of 2.2%. Economists thought it would be revised up to a 3.5% rate.
At the same time, unit labor costs, the report's inflation component, showed a bigger-than-expected decline, suggesting that the boost in productivity has not boosted wages.
And the Institute for Supply Management's reading on the services side of the economy showed expansion in the sector, versus forecasts for further erosion. The index rose to 50.6 in August from 49.5 in July. Economists thought it would hold steady at 49.5. Any number over 50 signals expansion and a number below it signals weakness.
Company news: Ciena (CIEN) reported a steep drop in fiscal third-quarter profit and warned that fourth-quarter sales won't meet forecasts as large customers delay purchases due to the weak economy. Shares of the network-gear maker slumped almost 25% in active Nasdaq trade and dragged on the technology sector. (Full story).
Cisco (CSCO, Fortune 500), Oracle (ORCL, Fortune 500), Intel (INTC, Fortune 500), Yahoo (YHOO, Fortune 500), Amazon.com (AMZN, Fortune 500) and Google (GOOG, Fortune 500) were among the big tech stocks sinking.
Blue chips were hit hard too, with 29 of 30 Dow components sliding. The lone exception was Coca-Cola (KO, Fortune 500).
The Dow's biggest losers were financial components AIG (AIG, Fortune 500), American Express (AXP, Fortune 500), Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500) and JP Morgan Chase (JPM, Fortune 500).
Caterpillar (CAT, Fortune 500) declined 5.6%. The heavy-equipment maker has been sliding for the last few sessions and was also reacting Thursday to fellow machinery maker Terex (TEX, Fortune 500)'s warning that 2008 profit won't meet forecasts. Terex fell almost 20%.
Aluminum producer Alcoa (AA, Fortune 500), aerospace companies Boeing (BA, Fortune 500) and United Technologies (UTX, Fortune 500), automaker General Motors (GM, Fortune 500) and telecom Verizon Communications (VZ, Fortune 500) all lost around 4%.
Among other movers, airlines, railroads and truckers declined, dragging down the Dow Jones Transportation (DJTA) average by 2.7%.
Market breadth was negative. On the New York Stock Exchange, losers beat winners five to one on volume of 1.3 billion shares. On the Nasdaq, decliners topped advancers by nearly four to one on volume of 2.38 billion shares.
Fuel prices: U.S. light crude oil for October delivery fell $1.46 to settle at $107.89 a barrel on the New York Mercantile Exchange, a fresh five-month low.
Prices slipped after the government's weekly inventories report showed crude stockpiles tumbled unexpectedly. Investors were also keeping an eye on updates about the damage from Gustav to Gulf Coast oil facilities, which account for about 25% of U.S. oil production.
Oil has fallen steadily over the last few weeks after tumbling more than 20% off the record high of $147.20 a barrel hit on July 11. Worries about Gustav's impact initially added to that rise, but the storm proved to be less destructive than had been feared, and oil prices resumed their slide on bets of a global economic slowdown. (Full story)
Gas prices declined for a fourth straight day, according to a national survey of credit-card activity. Even the Gustav-ravaged Gulf Coast states saw prices decline.
Other markets: In global trade, Asian and European markets ended lower.
In the bond market, Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.62% from 3.70% late Wednesday. Prices and yields move in opposite directions.
The dollar gained versus the euro and fell versus the yen.
COMEX gold for December delivery fell $5 to $803.20 an ounce. 
