U.S. Markets Sell Off On Unemployment Data, Auto Bailout Worries

New York, NY (AHN) - U.S. markets started Thursday on a sour note after the Labor Department reported larger than expected weekly unemployment claims. Stocks managed to rally back to breakeven, but renewed concerns over the auto bailout sparked a late sell off.

Before the opening bell, the Labor Department reported 525,000 initial unemployment claims for the week ending December 6, more than the 525,000 economists had expected. Continuing claims rose to 4.43 million, up from 4.09 million last week and well above the 4.1 million economists called for.

The Dow Jones Industrial average fell 196 points or 2.2 percent. Chevron was the only Dow gainer, up 1.3 percent on a 10 percent jump in oil prices.

Leading the way down was Bank of America and JP Morgan, both down 10 percent. Shares of General Motors also weighed on the Dow, down 10 percent after the auto bailout package hit a roadblock in the Senate.

The S&P 500 fell 25 points or 2.8 percent. The financial sector weighed on the index most, falling 8.5 percent on the session. The healthcare sector ended slightly positive, up 0.2 percent on strength from Eli Lilly, which reaffirmed its earnings guidance.

Tech fell as well with the Nasdaq Composite shedding 57 points or 3.6 percent. Big-cap tech participated in the fall with the Nasdaq 100 losing 3.4 percent on Thursday.

Crude oil had a nice rally, adding $4.46 a barrel to settle at $47.98 on the New York Mercantile Exchange. The move was sparked by a decline in the U.S. dollar which makes commodities more attractive. The US Dollar index fell 2.2 percent on Thursday.

On the economic front, the Department of Commerce reported an October trade deficit of $57.2 billion, up from $56.6 billion. A sharp drop in exports was blamed for the decline.

In Corporate news, Costco reported better than expected quarterly earnings as consumers turned to them for bulk discount prices.

Shortly after the market closed, Bank of America said it will cut about 30,000 jobs over the next three years as part of the Merrill Lynch merger.

Friday's market will see the release of November retail sales and a November reading from the Producer Price Index (PPI).