Stocks tumble as report on employment looms

The major stock indexes finished down at least 2.5% on Thursday after the market once again tumbled in the last hour or two of trading on the eve of the release of government employment data for last month.

Investors were concerned that today’s Labor Department report would show a further deterioration in the job market.

“It’s all about jobs, and right now the outlook is pretty downbeat,” said Alan Skrainka, chief market strategist at Edward Jones in St. Louis.

Employers cut a net 1.2 million jobs in the first 10 months of the year, pushing the unemployment rate to 6.5%.

Economists on average estimate that in November the jobless rate rose to 6.8% and payrolls shrank by 320,000 jobs.

Thursday’s market slide also reflected disappointment that a return engagement on Capitol Hill by Detroit’s Big Three carmakers didn’t go as smoothly as some investors had hoped. Some lawmakers remained resistant to the industry’s request for $34 billion in emergency funds.

Shares of General Motors slid 79 cents to $4.11, while Ford Motor fell 19 cents to $2.66.

The Dow Jones industrial average closed down 215.45 points, or 2.5%, to 8,376.24.

The Standard & Poor’s 500 index fell 25.52 points, or 2.9%, to 845.22, and the Nasdaq composite index sank 46.82, or 3.1%, to 1,445.56.

Treasury yields fell further as investors again sought the safety of government debt despite meager returns. The yield on the benchmark 10-year Treasury note fell to 2.56% from 2.67% late Wednesday.

The three-month T-bill fell to 0.01% from 0.02%.

Before anxiety gripped investors late in the day, they seemed to shrug off further poor economic data.

The Commerce Department reported that factory orders plunged 5.1% in October, the steepest decline in eight years.

Many retailing stocks rose on relief that huge declines in November sales weren’t even worse. Shares of Macy’s, which reported a 13% drop in same-store sales, climbed 6%. An index of 27 retailers in the S&P; 500 rose 1.5%.

AT&T; fell 3.1% after reporting it was cutting 12,000 jobs, or about 4% of its workforce.

Oil futures fell $3.12 to $43.67 a barrel on in New York.

Overseas, key stock indexes fell 1% in Japan, 0.2% in Britain, 0.1% in Germany and 0.2% in France.