Stocks plunged at the open as the morning's economic news disappointed: Economic growth was weaker than expected -- even with the boost of the rebate checks -- and jobless claims shot up to their highest level in five years.
Gross domestic product, the best gauge of economic growth, rose just 1.9 percent, the Commerce Department said in its first of three reports on second-quarter growth. It was certainly better than the first quarter's meager 0.9 percent growth rate, but economists had projected more robust growth of 2 to 2.4 percent, helped by the stimulus checks.
GDP is a lagging indicator and strategists weren't planning to give it much weight, given the skew of the rebate checks. The market is likely to be more troubled by jobless claims, which jumped by 44,000 last week to 448,000, the highest level since April 2003. Economists had expected a more modest 395,000 claims, according to Reuters.
Crude fell slightly, trading just above $126 a barrel after a sharp jump in the previous session.
Before the economic data came in and sent the market spiraling, it looked as if stocks were going to get a boost from Motorola after the handset maker reported it earned 1 cent a share, beating analyst estimates. Its shares jumped more than 7 percent.
U.S. earnings after the bell Wednesday were mixed, with Starbucks posting its first loss but seeing shares rise after it detailed store closures.
Walt Disney shares struggled in Europe, with investors worried by its outlook for ad sales, while Visa climbed on solid numbers.
Exxon Mobil shares slipped as the oil giant's $11.7 billion profit disappointed investors.
Mastercard posted a second-quarter loss of $747 million Thursday on an after-tax charge of $1 billion related to a settlement of antitrust litigation with American Express.
Across the globe, Asian markets finished mostly higher, while European indexes were mixed as investors digested a huge amount of big-name earnings.
Deutsche Bank reported a huge drop in profit and $3.6 billion in writedowns.
Still to Come:
THURSDAY: Chicago and Kansas City Fed branches report on manufacturing
FRIDAY: Auto sales; Jobs report; construction spending; ISM manufacturing report; Yahoo annual shareholder meeting; Earnings from GM, Chevron
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