The stock market has been thrashing about recently as investors attempt to gauge how companies will fare amid a further slowdown in the U.S. housing market, deterioration of credit and record oil prices that crested overnight above $99 a barrel.
Stocks, which have fallen in seven of the previous nine sessions, haven't enjoyed the boost seen in recent years during Thanksgiving week, which is capped by the retail bonanza Black Friday.
Economic readings did little to instill confidence among investors. The Mortgage Bankers Association said mortgage application volume fell 3.6 percent last week. Meanwhile, the slump in housing suggested banks will continue to face souring mortgage debt.
Government-sponsored lender Freddie Mac, which reported a $2 billion quarterly loss Tuesday and saw shares plummet nearly 29 percent, declined again Wednesday after an analyst downgrade. Countrywide Financial, the nation's largest mortgage lender, lost further ground.
Financial stalwarts including Citibank and Fannie Mae fell hard, as did insurance giant American International Group, which dropped to a two-year low. Financials compose much of the backbone for the S&P 500, which briefly turned negative for the year before recovering.
In other economic news, the Conference Board suggested an economic slowdown could accelerate in the coming months amid rising costs and further weakness in the housing market. Also, the Reuters/University of Michigan consumer sentiment survey showed its lowest reading in two years -- an unwelcome development for retailers entering the most important months of the year.
The Commerce Department said jobless claims fell by 11,000 last week, a positive sign for U.S. employment, but the report didn't appear to alleviate anxiety about the potential for weaker consumer spending.
'People are buying and selling off the headlines. The market is so emotional," said Neil Hennessy, president and portfolio manager of Hennessy Funds. "You look at oil approaching $100. People are taking their money and going to the sidelines."
Investors turned to government bonds amid the uncertainty. The yield on the 10-year Treasury note, which moves inversely to its price, fell to 4.01 percent from 4.09 percent late Tuesday.