Stocks Slide on Layoffs, Weak Retail Sales

Software firm Adobe Systems (ADBE Quote) reported preliminary fourth-quarter results that were ahead of expectations, but also announced plans for an 8% reduction in headcount.

Media concern Viacom (VIA Quote) also announced job cuts and said it would put a raise freeze on some senior-level positions.

In the pharmaceutical space, Merck (MRK Quote) reaffirmed its 2008 earnings projections but projected 2009 results would fall short of analysts' current estimates.

Homebuilder Toll Brothers (TOL Quote) said its fourth-quarter loss narrowed year over year and said its revenue in the coming year would fall substantially from current levels.

In one bright spot, retail giant Wal-Mart (WMT Quote) announced its same-store sales rose 3.4% in November.

Across the board, however, the November same-store sales picture was less encouraging. Costco (COST Quote), Limited (LTD Quote) and Pacific Sunwear (PSUN Quote) were among companies to announce slackening sales.

Bloomberg reported that management at GM and Chrysler were contemplating a prearranged bankruptcy as a means to get government funds.

Turning to economic data, the Labor Department said jobless claims for the week ended Nov. 29 fell 21,000 to 509,000. The result was better than economists' forecast of 540,000 claims for the week. Separately, the Census Bureau's October read on factory orders showed a 5.1% decline, a larger drop than the 4% consensus estimate.

Speaking in Washington, Federal Reserve Chairman Ben Bernanke said that the government needs to take further steps to stop home foreclosures. He said that one option is for the government to buy troubled mortgage securities, and another is for federal agencies to help shoulder the costs of reductions in borrowers' monthly payments.