Stocks Begin to Claw Their Way Back

Stocks turned mixed in afternoon trading, shrugging off earlier losses triggered by the biggest monthly job loss in 34 years and the highest percentage of delinquent mortgages on record.

The Dow Jones Industrial Average opened down about 90 points after the jobs report then doubled that after the mortgage-delinquency report came out at 10am. By afternoon, the Dow's loss was down to about 20 points and both the S&P 500 index and Nasdaq were higher.

The Dow dropped more than 215 points in the previous session, snapping a two-day winning streak.

Art Cashin said low volume today was disappointing but found some cause for optimism.

“We probably have a couple more days or weeks to go through this but it’s encouraging that we continue to look like we’re in the bottoming process.”

The number of delinquent mortgage loans, which means at least one payment past due, jumped to 6.99 percent in the third quarter from 5.59 percent a year earlier, the Mortgage Bankers Association reported. That was the highest in the history of the MBA survey. The number of mortgages in foreclosure rose to 2.97 percent from 1.69 percent a year ago.

Subprime mortgages were one of the biggest culprits, with 20 percent of those mortgages in delinquency.

Economists said that job losses will only exacerbate mortgage deliquencies and foreclosures in the coming months.

Employers cut 533,000 jobs from nonfarm payrollsin November, the sharpest job loss since December 1974 and much more than the 340,000 decline economists had expected. The unemployment rate rose to 6.7 percent from 6.5 percent.

The prior two months' job losses were revise to show that a total of 199,000 more jobs were lost than previously thought in September and October. That means 1.25 million jobs were lost in the last three months alone, bringing the total to nearly 2 million since the start of the year.

"This is an eye-poppingly bad number," Art Hogan, chief market analyst at Jefferies, told CNBC. "Everybody seems to be coming out and cutting 10-percent of their workforce — at least. ... Does that mean we’re going to see on average for the next six months a job-loss number in the 500s? No. I think we stabilize at some point, probably in the first half of next year where that number is going to start to work its way back to the 200,000-job (loss) range."

Hogan added that the stimulus packages being worked on now, which will get dumped on the Obama administration’s lap on day one, will help make that happen, as opposed to having to wait to see what the administration does in the first 100 days.

Some economists say, while December's jobs report will for sure be bad, the seeds of recovery are already in place.

Meanwhile, the fate of the Big Three US auto-makers continued to hang in the balance. The CEOs of Ford, General Motors and Chrysler headed back to Capitol Hill to try and avert bankruptcy for the troubled companies.

Congress is weighing a plan that would force a major restructuring of the Big Threein exchange for a multibillion-dollar bailout.

GM and Chrysler have said they would be open to consolidation as a condition of getting the government funds.

>> See live-streaming video of the hearings.

Customers of Boeing's 787 Dreamliner faced more delays as the aerospace giant is expected to announce another setback to its latest addition on the back of lengthy strikes and production problems.

Dow energy components ExxonMobil and Chevron dropped about 4 percent each as oil prices drifted toward $40 a barrel.

Technology stocks also took a hit amid worries about a cutback in tech spending by businesses and consumers. Hewlett-Packard was down more than 4 percent and Amazon was down more than 6 percent.

On the earnings front, closeout retailer Big Lots reported its profit fell 14 percent to $12.25 million as the pullback in spending took a toll even on the discount retailers. The chain also slashed its earnings forecast for the current quarter, saying it expects same-store sales to slide.

Other retail stocks were mostly lower, with JCPenney and Target both down about 5 percent.

>> Check in on how the holiday season is shaping up at CNBC's Holiday Central.