Stocks Slide Amid Unemployment Worries

Stocks fell sharply Thursday after new unemployment data and more news of corporate layoffs reignited investors' worries about the economy, while the high-tech sector paused for breath after a recent string of gains.

``There are renewed fears about weakness in the economy. We believe the economy is bottoming, but we are not there yet,'' said Alan Skrainka, chief market strategist at Edward Jones of St. Louis.

But Wall Street's newfound sense of cheer helped blue chips to curb their losses just before the close.

The Dow Jones industrial average closed down 80.03 at 10,796.65 after being down more than 148 points earlier in the session..

The technology-heavy Nasdaq Composite lost 74.42 to end at 2,146.18 and end its four-day winning streak. However, the loss accounted for less than half of the 185.72 that the  index had gained since last Friday.

The Standard & Poor's 500 index, the market's broadest measure, slipped 18.85 to finish Thursday at 1,248.58.

Investors were trading cautiously ahead of Friday's unemployment report for April, Skrainka said. Unemployment is expected remain at 4.3 percent, where it stood in March.

Weekly first-time jobless claims climbed to 421,000 in the week ended April 28, well exceeding Wall Street expectations and soaring to their highest level since March 23, 1996.

``Ultimately, weakness in the labor market cause weakness in incomes, which threatens consumer spending, so the chance of slipping into a full-scale recession is increased,'' said Pierre Ellis, senior economist, at Decision Economics.

The market's losses were widespread, in keeping with the fact that most businesses have been hurt by the weakened economy and that many have been forced to lay off workers and slash prices.

General Motors fell 52 cents to $56.08, while Coca-Cola dropped 82 cents to $46.75. Both are Dow stocks.

Tech shares also pulled down the market's indexes. IBM fell $1.70 to $113.70, while Intel stumbled $1.52 to $30.40. Both are Dow components, as well.

Analysts said investors chose to cash in some profits reaped in April after hearing companies say that second quarter - rather than the first - will be the weakest of the year.

``Everyone has been talking about a recovery being around the corner. But now we may have another disappointing earnings season for the second quarter, as well,'' Skrainka said.

The potential for more bad earnings news weighed on certain stocks, including Newell Rubbermaid and Papa John's.

Newell Rubbermaid fell $1.49 to $25.85 after announcing earnings that missed analysts' expectations and also warning that second-quarter and yearly profits will also fall short. The housewares and consumer products maker also said it plans to cut 3,000 jobs.

Papa John's dropped $1.80 to $27.52 after warning Wednesday that higher cheese prices will crimp second-quarter and yearly profits. That dim outlook overshadowed the pizza delivery company's first-quarter earnings, which were 3 cents per share higher than expectations.

Although investors still are worried about the economy, analysts were encouraged that the Dow managed to cut its losses in the last hour of trading when it recovered from a triple digit loss. They said the selloff moderated because investors believe the earnings and economic data will compel the Federal Reserve to approve a bigger-than-expected rate cut - a 0.5 percentage point reduction vs. 0.25 percentage point - when it meets May 15.

Analysts also reasoned that some pullback was expected after an April rally that was triggered by a spate of better-than-expected earnings and positive economic data.

``Today was destined to be a hesitation day. It's not overly bearish,'' said Gregory Nie, technical analyst for First Union Securities. ``We had a good day (Wednesday).''

Thursday's losses were minimal compared to the strides the market made in April. Most spectacularly, the Nasdaq has climbed about 31 percent from its closing low for the year, 1,638.80, reached on April 4.

``After a monthlong rally, the stock market is a little tired,'' said Skrainka, the strategist at Edward Jones.

Declining issues outnumbered advancers 2 to 1 on the New York Stock Exchange, where volume came to 1.11 billion shares, below Wednesday's 1.34 billion.

The Russell 2000 index, which measures the performance of smaller companies stocks, fell 5.99 to 485.65.

Overseas, stocks finished lower Thursday. Germany's DAX index fell 2.2 percent, France's CAC-40 slipped 2.1 percent, and Britain's FT-SE 100 lost 2.2 percent.

Financial markets in Japan were closed Thursday.