Stocks Bow to Bad News; Dow Slides 5%

Yahoo! (YHOO Quote) CEO Jerry Yang, meanwhile, said late Wednesday that he's prepared to negotiate a new deal with Microsoft (MSFT Quote), according to a report by the Associated Press. Yahoo! had earlier this year rejected a takeover offer by Microsoft at $33 a share.

Yahoo! shares edged up 0.3% to $13.96, while Microsoft shed 5.4% to $20.88.

As for economic data, the Department of Labor reported that jobless claims for the week ended Nov. 1 tallied at 481,000, higher then economists' estimate of 476,000. The previous week's figures were revised up to 485,000 from an initial tally of 479,000.

Meanwhile, the Bureau of Labor Statistics also announced that its preliminary read of nonfarm productivity came in at 1.1%, just ahead of analysts' forecasts but down substantially from 3.6% in the second quarter.

Investors were sorting through a new heap of quarterly earnings results:

• Tech bellwether Cisco (CSCO Quote) reported profit that was flat year over year even but issued cautious revenue guidance. The stock skidded 2.6% to $16.94.
• Media firm News Corp. (NWS Quote) reported declining profit and cut its 2009 guidance, and shares stumbled 16% to $8.31.
• Brewery Anheuser-Busch (BUD Quote) reported that its third-quarter results declined 5.7% year over year thanks to charges related to its upcoming sale to European beverage concern InBev. Anheuser-Busch shares climbed 1.5% to $64.58.
• Carmaker Toyota (TM Quote) said second-quarter net income declined and it cut its full-year profit forecast. Shares plummeted 17% to $67.09.
• Asset manager Blackstone (BX Quote) swung to a loss. The company cited tumultuous credit and equity markets as a source of its troubles. Its stock gave back 12% to $7.55.
• Utility company PG&E (PCG Quote) reported income that increased 9% year over year and reaffirmed its 2008 and 2009 forecasts. Shares edged down 5.3% to $34.36.

Retailers were also rolling out same-store sales figures for October. Big-box retail firm Costco (COST Quote) reported that its same-store sales were down 1%, although total revenue edged up 2%. The same-store figure fell short of analyst estimates. Fellow bulk merchant Wal-Mart (WMT Quote) announced a better-than-expected 2.4% increase in same-store sales.

Costco slipped 0.4% to $53.51, and Wal-Mart skidded 1.2% to $53.49.

"In a deleveraging world, that includes the consumer, who is trying to figure out how not to take on more debt for the first time in a long time," said Hanlon of Delta Global. He said that high-end and leisure retailers should continue to feel a pinch, while discount stores like Wal-Mart will continue to benefit.