Stocks Slide After GDP, Jobless Reports

Stocks opened lower Thursday after reports on GDP and jobless claims came in weaker than expected.

The Commerce Department left its estimate for fourth-quarter economic growth at a 0.6 percent annual rate amid weakness in spending and housing and a slump in inventories. Economists had expected an uptick to 0.8 percent growth.

Jobless claims rose by 19,000, much more than expected, to 373,000 last week. The four-week moving average, however, fell to 360,500 from 361,750.

Data in the jobless-claims report are "consistent with weakening labor market conditions, and it appears that the weakening trend is steepening," wrote Joshua Shapiro, chief U.S. economist at MFR Inc., in a morning note.

As for the market, David Sowerby, chief market analyst at Loomis Sayles, says he thinks we marked the lows of this cycle in late January. "We're slowly crawling back," Sowerby told CNBC. "Nevertheless, we'll get another gut check, but we're crawling back in 2008." Sowerby is keen to get in on early cyclicals. He likes techs and consumer stocks, notably Corning with its LCD-screen technology, which may be a beneficiary of consumer tax rebates, and DirecTV .

Financial-services stocks came under pressure after two brokerages cut their profit forecasts for J.P. Morgan Chase and residential mortgage lender Thornburg Mortgage said it faced margin calls on $2.9 billion of securities backed by below-prime loans.

And, another rogue trader is wreaking havoc in the sector. MF Global said one of its traders dealing in wheat futures conducted unauthorized trades, resulting in a bad-debt provision of $141.5 million. Unlike Societe Generale, which is still probing Jerome Kerviel, who rang up more than $7 billion in losses, MF Global says this trader has been terminated, effective immediately.

In earnings, Sprint Nextelposted a loss of $29.4 million, or nine cents a share, amid a steep impairment charge and gave a dour forecast on subscriber losses. Analysts had expected a profit of 18 cents a share.

Sears Holding reported its earnings tumbled 48 percent amid increased markdowns and lower sales at its Kmart and Sears stores. The retailer, controlled by hedge-fund manager Eddie Lampert, said earnings fell to $426 million, or $3.17 a share, in the fourth quarter ended Feb. 2, from $811 million, or $5.27 a share, a year earlier. Same-store sales dropped 4.5 percent. Lampert has come under fire for failing to turn around the struggling chains and merge them into a cohesive brand.

Freddie Mac, the second-biggest provider of residential mortgage funding, on Thursday said its loss widened to $2.5 billion in the fourth quarter as the housing and credit crises worsened. The figure represented a loss of $3.97 a share, worse than the $3.05 a share loss analysts had been expecting.

A day earlier,Fannie Mae, the largest mortgage lender, reported a loss of $3.6 billion, or $3.80 a share, also worse than analysts had expected. And, regulators raised the caps on the portfolios of Fannie and Freddie, which will free up billions for the companies to reinvest in the struggling housing market.

Apple affirmed its goal to sell 10 million iPhones in fiscal 2008. The company also said it will detail next week how outside programmers can create software for the iPhone, a move expected to boost sales by making the device more accessible. Apple shares have fallen nearly 38 percent since the beginning of 2008.

After the closing bell, earnings are due out from fellow tech Dell Computer. Analysts expect earnings of 36 cents a share.

The second day of Congressional testimony by Federal Reserve Chairman Ben Bernanke is not likely to add much to Wednesday's message that the Fed will ease rates further to boost the economy, but investors will still watch it with interest for the question-and-answer segment.

Bernanke indicated Wednesday that the Fed was more concerned with growth than rising prices, but analysts said price rises can't be ignored.

"You can’t be all things to all people, and I think that’s the problem [Bernanke] is facing," Hugh Johnson, from Johnson Illington Advisors, told "Worldwide Exchange."

"Longer-term he's got to focus back on inflation, perhaps raising rates in the second half," Johnson added.