Stocks Make Way Off Lows Despite More Grim Data

Updated from 9:35 a.m. EST

Stocks on Wall Street tumbled early Thursday as traders continued to fret about the struggling economy, but the market turned about an hour into the session and made its way back to the flat line.

The Dow Jones Industrial Average, down more than 200 points earlier, was recently off only 45 points at 7952. The S&P 500 was losing 6 points at 801. The Nasdaq was lower by 1 point at 1385.

Despite the recovery from the day's worse levels, the latest economic data were adding to existing concerns that the U.S. is headed for serious struggles. The Labor Department reported that jobless claims for the week ended Nov. 15 had increased by 27,000 to reach 542,000, their highest levels since 1992. Economists had anticipated claims numbers to come in at 503,000.

"In past recessions, investors eventually ignored bad employment data, having been numbed to the data by previous data and plentiful evidence of impending doom," Tony Crescenzi, chief bond market strategist for Miller Tabak, wrote on his RealMoney.com blog.

Crescenzi said that investors will still have to wait for additional indications of the depth and severity of the downturn before determining that the market has discounted the worst of what is to come. "Data need not get better to spark a rally, they need only stop getting worse," he wrote.

Meanwhile, economists at the University of Michigan said the U.S. is indeed in a recession and that the worst won't come until the middle of next year.

A November manufacturing survey from the Philadelphia Federal Reserve yielded an index reading of negative 39.3 for November, worse than minus 37.5 the previous month. Economists were anticipating a reading of negative 35.