Housing Data Shake U.S. Stocks

"We had the first-time jobless claims well over 400,000 for the first time since 2005," said Pento. "The economy is weak. We're not looking at any second-half rebound."

The downdraft in stocks came as traders sorted through another slew of corporate quarterly reports.

Following the close of Wednesday's trading, online merchant Amazon.com (AMZN Quote) beat earnings estimates on both the top and bottom lines.

Elsewhere in technology, chipmaker Qualcomm (QCOM Quote) matched analyst expectations despite a decline in third-quarter profit. Qualcomm also settled a patent dispute with cell-phone maker Nokia (NOK Quote).

Meanwhile, homebuilder Ryland (RYL Quote) posted a loss that was worse than its year-ago results, while Pulte Homes (PHM Quote) narrowed its own loss.

Before the new day's trading got underway, investors heard quarterly results from another heap of companies. Dow Chemical (DOW Quote) reported a 27% drop in profit on rising energy and materials costs.

Farm products maker Bunge (BG Quote) and fertilizer seller Potash (POT Quote), on the other hand, both recorded soaring profits.

In the pharmaceutical space, Elan (ELN Quote) cut its second-quarter loss in half on improving sales of its multiple-sclerosis drug Tysabri. Eli Lilly (LLY Quote) announced a 44% increase in second-quarter income, but reduced its full-year earnings outlook. Celgene (CELG Quote) likewise saw profits soar on strong sales of its Revlimid blood cancer treatment.

Automaker Ford (F Quote) posted a wider-than-expected loss of $8.7 billion on waning demand for its heavy vehicles and hefty impairment charges.

Consumer-products company Kimberly-Clark (KMB Quote) saw second-quarter earnings decline 10% on increasing natural gas, oil and distribution costs.