Wall Street recoiled again Thursday, sending stocks lower for a second day after Cisco Systems Inc. reported slumping demand and retailers turned in generally weak sales for October.
Concerns about widespread economic weakness sent the major stock indexes down more than 3.5 percent, including the Dow Jones industrial average, which tumbled more than 400 points.
By the close of trading, the Dow had fallen 443.48 to 8, 695.79.
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Comments from Cisco that it saw a steep drop in orders in October and reports from retailers that consumers are skipping trips to the mall provided fresh evidence of the economy's struggles. While Wal-Mart Stores Inc. benefited from bargain-seekers, some specialty retailers posted big drops in monthly sales.
Adding to investors' list of worries, the Labor Department said the number of people continuing to draw unemployment benefits jumped to a 25-year high, increasing by 122,000 to 3.84 million in late October. It marked the highest level since late February 1983, when the economy was being buffeted by a protracted recession.
While new claims for unemployment benefits dipped by 4,000 to a seasonally adjusted level of 481,000 last week, the levels remain elevated. The findings added to the market's unease ahead of Friday's October employment report, a widely watched barometer of the economy's health.
"I think everybody kind of simultaneously — the consumers and businesses — is tightening belts so that's triggering a reasonably precipitous slowdown that's widespread," said Ed Hyland, global investment specialist at J.P. Morgan's Private Bank. "This is something that we haven't really seen, this level of this rapid and significant pullback both in the market and the economy."
Still, the market's two-day slide follows an enormous run-up since last week so some pullback was expected, analysts said.
Richard Campagna, chief investment officer at Provident Investment Counsel in Pasadena, Calif., contends the market's pullback isn't surprising given the enormity of the recent run-up. He said the weak economic readings shouldn't come as a surprise given a freeze in credit markets that has disrupted lending and other economic activity since September.
Campagna said the light volume and overall fear among investors is exacerbating the market's volatility.
"Some people are pushing this market around more than they should be out of fear," he said. Many everyday investors are sitting on the sidelines, he said. "Everyone has been shellshocked with the moves in the market."