Stocks Bow to Bad News; Dow Slides 5%

Update from 3:53 p.m. EST

Stocks on Wall Street took a severe pummeling and closed with heavy losses Thursday, as economic data releases pointed to a prolonged downturn and companies reported job cuts, weak earnings and flagging sales.

The Dow Jones Industrial Average sank 443.48 points, or 4.9%, to 8695.79, and the S&P 500 gave back 47.89 points, or 5%, to 904.88. The Nasdaq shed 72.94 points, or 4.3%, to 1608.70.

In rising off its Oct. 27 lows, the market went from an oversold level to overbought in a very short period, said Robert Pavlik, chief investment officer at Oaktree Asset Management. "It's working off some of that overbought condition," he said. The market has overreacted to a thawing credit market, he said. "I still think there's weakness ahead that just hasn't been factored in." ...