Stocks fell sharply Thursday, led by Intel, after an analyst downgrade on the chip sector. A stronger dollar also weighed on the market.
At the halfway point, the Dow Jones Industrial Average was down over 100 points, or more than 1 percent. The S&P 500 and Nasdaq also declined, with the tech-heavy Nasdaq the hardest hit of the three — down 2 percent.
Bank of America-Merrill Lynch slashed its 2010 growth forecast for the global chip industry and downgraded 10 chip makers, including Intel.
Intel shares were down more than 5 percent, making them the biggest drag on the Dow.
The Philadelphia Stock Exchange semiconductor index was down more than 4 percent.
Alcoa and Caterpillar rounded out the Dow's bottom three.
Merck was the only gainer on the blue-chip index.
The dollar roseagainst both the yen and euro as investors trimmed their exposure to risk and bought into the U.S. currency.
Jobless claims were unchanged last week but the prior week was revised up by 3,000 claims. The four-week moving average, which smooths out weekly fluctuations, dropped to its lowest level in nearly a year.
"Claims remain high enough to signal further payroll declines, but they are heading in the right direction," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note to clients. "[W]e are sticking to our view that employment will level off in the first half of next year, perhaps as soon as the end of the first quarter," he said.
Some disappointing news on the housing front: Mortgage delinquencies rose to 9.64 percentof all loans outstanding in the third quarter and foreclosures jumped to 4.47 percent for a total of 14.41 percent — another new record — the Mortgage Bankers Association reported.
At this point, the number of loans delinquent or in foreclosure are bigger than the number of new and existing homes for sale today.
Leading indicators rose 0.3 percentin October, slightly lower than expected, after a 1-percent jump in September. Still, it was the seventh-straight month the gauge has risen.
And the Philadephia Fed branch said its gauge of regional manufacturing activity rose to 16.7 in November from 11.5 in October, beating expectations.
In deal news, Vivendi said it wants to exit NBC Universal, the parent of CNBC, but isn't quite there yet.
"We are not interested in staying onboard a new GE-Comcast ownership of NBCU," said Vivendi CFO Philippe Capron. "[W]e will exit and it will give us more headroom."
As for that tie-up between Reckitt Benckiser and Colgate Palmolive , both companies say there is no truth to that speculation.
A couple of companies announced job cuts this morning:
Insurer Aetna is cutting 625 jobs, or about 1.8 percent of its workforce.
And Time Warner's AOL unit is expected to lay off about one-third of its workforce as the company is pushing aggressively to cut costs in preparation for its spinoff.
Reports indicated that AOL was asking about 2,500 workers to take voluntary layoffs in an effort to cut $300 million in annual operating costs.
JPMorgan Chase shares fell after the company announced it is buying the half of European investment bank Cazenove that it doesn't own, in a deal valued at $3.4 billion.
At the same time, Keefe, Bruyette & Woods said JPMorgan is likely to increase its dividend in early 2010 due to its capital position and recent repayment of government bailout money.
Economic numbers are likely to drive today's market action following Wednesday's modest losses, and increasingly light volume could make the markets more volatile. Volume has become unusually light, with many institutions either getting very defensive or simply moving to the sidelines to lock in solid gains for the year, traders told CNBC.
The last remnants of earnings season trickled in, with Sears Holding providing an upside surprise due to the first positive performance from Kmart in several quarters.
Limited Brands beat analysts' earnings expectations and raised its outlook, helped by an improvement at its Bath & Body Works stores, but its Victoria's Secret brand disappointed.
Williams-Sonoma, beat by a wide margin and raised its full-year outlook but Dick's Sporting Goods reported sales declined.
Dallas Fed President Richard Fisher continues the recent spate of Fed commentary, although his speech to the Cato Institute's annual monetary policy conference won't take place until 4:45 pm, after the market closes. And at 4:30 pm, the Fed will be out with its latest balance sheet figures.