U.S. Markets Plummet On Economic Data, Enter Bear Market Territory

New York, NY (AHN) - Disappointing unemployment data set the tone early on as the markets opened Thursday lower. The selling never let up as weak retail sales data and sliding commodities pressured all three major indices.

Before the open, the Labor Department reported an increase of 15,000 unemployment claims for the week ending Aug 23, bringing total claims to 444,000. Economists expected a drop to 400,000.

The markets never shook off the news as the Dow Jones Industrial average fell 344 points or 3 percent. Coca-Cola was the only Dow component to finish without a loss. Financial components Bank of America and American International were the biggest Dow laggards, down 7.1 percent and 6 percent, respectively.

The S&P 500 shed 42 percent or 3.3 percent as broad-based selling weighed heavily on the index. The financial sector was the worst performer, down 4.7 percent on the session. Thursday's loss puts the S&P 500 down 20 percent from last high in October 2007, thus putting us into bear market territory according media standards.

The sell-off in financials received an extra kick when well respected PIMCO bond manager Bill Gross, while speaking on CNBC, said the global financial marketplace is in the process of deleveraging and that he is waiting for the U.S. Treasury to step up its actions.

Retailers were also weak as a pullback in August same-store sales was reported by Target, Gap, JC Penney, and Abercrombie & Fitch. However, sales at Wal-Mart and BJ's Wholesale did grow in August.

The tech sector, struggling off late, saw no relief on Thursday as the Nasdaq Composite suffered its fourth worst day of the year, off 74 points or 3.2 percent. The semiconductor sector finished the session at a 5 year low. Shares of Yahoo, which traded around 30 during the Microsoft talks a few months ago, finished at $17.75, a 5 year low.

Crude oil fell $1.46 a barrel, settling at $107.89 on the New York Mercantile Exchange. The commodity is down 6.5 percent on the week. Weekly oil and gas inventory numbers showed a 1 million barrel decline in gasoline reserves, short of the 1.6 million economists has expected. The results weighed on oil prices which were trading higher prior to the announcement.

In other economic news, the Industrial Service Manufacturers (ISM) Index had an August reading of 50.6, ahead of the 49.5 economists expected and above the 50 level, which is widely considered to show expansion.

Friday's session will see the release of nonfarm payrolls data and hourly earnings data before the open.