NEW YORK (Reuters) - Stocks sold off on Thursday in the worst two-day slide since October 1987 with disappointing corporate outlooks and bleak sales from major retailers fueling fears of a deepening economic downturn.
Underscoring concerns about anemic consumer spending heading into the holiday season, retail chains posted the worst monthly sales data in more than three decades as consumers, beleaguered by the financial crisis, slashed spending in October.
Target (TGT.N) and other discounters reported larger-than-expected drops in same-store sales, sending Target down 6 percent. An S&P index of retailers .RLX sank 5.4 percent.
"This downward spiral of negative feedback is spreading to the economy as a whole and to the consumer, and that's not a positive sign for stocks," said Bucky Hellwig, senior vice president at Morgan Asset Management in Birmingham, Alabama.
"Those are things that there's really no quick fix for and we're seeing that discounted in the market."
Cautious investors looked ahead to Friday's jobs payroll data, which is expected to further underscore the weakening economy after weekly jobless claims fell but still showed serious labor market strains.
The broader market, measured by the S&P 500, experienced its worst two-day slide since October 1987. Despite a strong rally on Election Day earlier in the week, the market has not been able to make much headway as it tries to come back from a disastrous October.
The S&P 500 is up 6.59 percent from its October 27 close, which was its lowest close since March 2003. But the S&P, the Dow industrials and the Nasdaq are still at multi-year lows.
The Dow Jones industrial average .DJI tumbled 443.48 points, or 4.85 percent, to 8,695.79. The Standard & Poor's 500 Index .SPX dove 47.89 points, or 5.03 percent, to 904.88. The Nasdaq Composite Index .IXIC shed 72.94 points, or 4.34 percent, to 1,608.70.
The broad Dow Jones Wilshire 5000 .DWCF slid 468.11 points, or 4.9 percent, representing a paper loss of about $600 billion, to close at 9,079.72. In the last two days, the DJ Wilshire 5000 index has fallen nearly 10 percent, amounting to a paper loss of about $1.2 trillion.
After the bell, shares of Dow component Walt Disney Co (DIS.N) fell 9 percent to $20.75 after the entertainment company reported quarterly profit that missed expectations. In regular trading, Disney closed at $22.81, down 5.9 percent on the New York Stock Exchange.
Qualcomm Inc (QCOM.O) also fell in after-hours trading after the supplier of cell phone chips and technology licenses gave a weaker-than-expected outlook. Qualcomm was down 3.8 percent at $31.80. In regular Nasdaq trading, Qualcomm had dropped 6 percent to end at $33.05.
During the regular session, Cisco Systems (CSCO.O) lost 2.6 percent to close at $16.94 on Nasdaq after it said following Wednesday's closing bell that revenue could fall as much as 10 percent in the current quarter.
Chevron (CVX.N) was the biggest drag on the Dow, sliding 6.4 percent to $70.11 on the New York Stock Exchange as the price of oil slid on concerns that demand will suffer during a recession. U.S. front-month oil futures dropped $4.53 to settle at $60.77 a barrel on the New York Mercantile Exchange.
The U.S.-listed stock of News Corp NWSa.N dove 15.6 percent to $8.26 on the NYSE after the Australian media conglomerate cut its full-year forecast.
Shares of General Motors (GM.N) slid 13.7 percent to $4.80 as U.S. auto executives were set to meet with a top lawmaker to seek urgent aid to weather the global slowdown.
Ford (F.N) was down 5.3 percent at $1.98.
Japanese rival Toyota Motor Corp (7203.T)(TM.N) more than halved its profit forecasts as the financial crisis batters demand for its cars. Toyota's U.S.-listed stock skidded 16.5 percent to $67.09 on the NYSE.
Discount retail chain Target shed 6 percent to $35.47. Among other retailers that posted a decline in same-store sales, mid-priced department store operator J.C. Penney (JCP.N) fell 1.5 percent to $21.90, and luxury retailer Saks Inc SKS.N lost 5.3 percent to $5.16.
Trading was moderate on the New York Stock Exchange, with about 1.53 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.39 billion shares traded, above last year's daily average of 2.17 billion.
Declining stocks outnumbered advancing ones on the New York Stock Exchange by a ratio of about 5 to 1, while on the Nasdaq, about 11 stocks fell for every three that rose.