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Stocks Pummeled by Eurozone, Fiscal Cliff Worries

Continuing claims in the week ended Oct. 27 fell by 135,000 to 3.127 million, from a downwardly revised 3.262 million. Economists were expecting continuing claims of 3.253 million.

Overseas, the European Central Bank stood pat on its benchmark interest rate of 0.75% Thursday amid deepening concerns about the eurozone economy and as Spain continued to refrain from requesting a bailout that would trigger ECB bond-buying.

"While the ECB apparently stands ready to buy peripheral governments' bonds, President Mario Draghi gave little assurance on Thursday about when it might start or how many it might purchase. He also ruled out writing off any of Greece's debt and gave no firm indication of any other policy support to come," said Jennifer McKeown, an economist at Capital Economics. "In all, we think that the press conference was somewhat disappointing."

As expected, the Bank of England held off on additional quantitative easing for now amid some recent upbeat economic data, though more stimulus looked to be a possibility in the near future amid doubts of a sustained economic recovery.

The U.K. Monetary Policy Committee decided to keep the key interest rate at a record low of 0.5% and the size of the bond-buying program at 375 billion pounds.

Also, the Greek parliament on early Thursday passed by a narrow margin a new, tough austerity package that triggered mass protests on the streets of Athens but was required to help bring more financial aid to the country.

Despite this, German Finance Minister Wolfgang Schaeuble said that a decision on releasing the bailout funds will unlikely be reached next week.

"Despite the rather close passage of austerity measures by the Greek parliament, eurozone leaders have already warned that the work is far from done," said Geoffrey Yu, a currency strategist at UBS.

Investors were also keeping an eye on China's big leadership change, which could be a more significant event for emerging economies than the re-election of Obama.

"The installation of a cohesive Chinese leadership committed to putting the economy on a more sustainable footing would create opportunities for consumer goods producers while also signaling an end to the global commodity boom," said Mark Williams, an economist at Capital Economics.

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