Stocks Slump Along With Retail Sales; Dow Sheds 400 Points

NEW YORK (MarketWatch) -- U.S. stocks on Thursday thudded lower for a second day, pushing the Dow Jones Industrial Average under 9,000 for the first time in a week, as mostly bleak retail sales and a lowered outlook from Cisco Systems Inc. underscored the troubled economy.

"The next step for the markets is to determine the depth and duration of the economic downturn. Data need not get better to spark a rally, they need only stop getting worse," said Tony Crescenzi, bond market strategist at Miller Tabak & Co.

Near session lows, the Dow Jones Industrial Average declined 414.17 points to 8,725.10, with all of its 30 components trading lower.

Among the blue-chip index's heaviest weights, General Motors Corp. fell 10.6%.

Down the least, shares of Wal-Mart Stores Inc. were off fractionally.

"The consumer is clearly suffering and discretionary spending is clearly suffering. However, it is not a disaster -- you see more people at Wal-Mart than you used to," said Marino Marin, managing director, Gruppo Levey & Co.

Energy, financials and industrials fronted sector declines among the S&P 500 Index's 10 industry groups.

Among the more noteworthy decliners among energy firms, Consol Energy Inc. fell 18.8%.

The S&P 500 shed 41.99 points to 910.78, while the Nasdaq Composite Index declined 57.23 to 1,624.41.

Volume on the New York Stock Exchange topped 861 million, with declining stocks outpacing advancers roughly 5 to 1. On the Nasdaq, 562 million shares exchanged hands, with decliners outpacing advancers nearly 3 to 1.

Crude slips

On the New York Mercantile Exchange, crude futures declined, lately down $4.03 to $61.27 a barrel. .

Gold futures fell $10.20 to end at $732.20 an ounce, after jumping to $761.30 earlier on.

Treasury prices were mixed, with the 2-year yields falling to their lowest level since March, when the collapse of Bear Sterns sent investors fleeing to government debt.

The Labor Department reported the number collecting jobless benefits hit a 25-year high, while first-time unemployment claims fell last week. The data came ahead of Friday's jobs report for October, with the unemployment rate expected to rise to 6.3%. .

"The 'trade in waiting' will likely depend on tomorrow's employment report for the month of October, which will probably offer the greatest evidence as to why the Democrats won this week. It's the economy, stupid!" said Kevin Giddis, managing director of fixed income for Morgan Keegan & Co.

In a separate report, the government said U.S. companies cut back employees' hours in the third quarter, with productivity growth up more than anticipated. .

Several retailers released downbeat sales for October.

Costco Wholesale Corp. said same-store sales fell 1% in October, while Limited Brands Inc. reported same-store sales dropped 9% and Big Lots Inc. cut its estimate of third-quarter earnings.

Wal-Mart, however, posted better October sales than forecast.

Shares of technology bellwether Cisco Systems Inc. fell 2.2%, one day after the world's biggest computer-networking equipment maker reported flat net income and warned of slowing sales.

News Corp. shares slumped 16.3% after the media giant reported a 30% fall in fiscal first-quarter profit and cut its annual earnings outlook.

News Corp. is the parent company of MarketWatch, the publisher of this report.

Toyota Motor Corp. dropped 18% after the Japanese automaker cut its earnings outlook.

Wells Fargo & Co. traded 9.7% lower on its plan to sell $10 billion in common stock.

After the close of trading Thursday, Walt Disney Co. , Qualcomm Inc. and Nvidia Corp. are all scheduled to report results.

Overseas, the Bank of England cut interest rates by 1.5 percentage points. The European Central Bank also cut rates, but by a more modest half point.

European stocks trade sharply lower. .

U.S. stocks tumbled Wednesday, suffering their worst-ever percentage losses in the day after a presidential election, as the Dow Jones Industrial Average dropped 486 points, the S&P 500 lost 52 points and the Nasdaq dropped 98 points.

By Kate Gibson