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.

Still another indicator came from the Conference Board, who said its October leading indicators index fell 0.8%, a greater decline than the 0.6% forecast by analysts.

The automakers remained in the spotlight, as the prospects of government aid for

General Motors

(GM) - Get Report

,

Ford

(F) - Get Report

and

Chrysler

appeared to diminish as the Senate, which heard testimony from CEOs of the Big Three on Tuesday and Wednesday, deadlocked on the proper course of action and canceled a Thursday vote on the issue.

GM

also announced it would be cease production at one of its Thailand facilities for as much as two months.

Separately, the

Financial Times

, citing a person familiar with recent discussions, reported that Chrysler is looking to reinvigorate merger discussions with GM as the companies face increasing cash-flow troubles.

As the help from Congress looked less likely, GM's partly owned financing arm

GMAC

applied with the

Federal Reserve

to become a bank-holding company, a transformation that would secure it access to funds offered by the Troubled Asset Relief Program.

Turning to financial companies,

Citigroup

(C) - Get Report

shares looked ready to recover from a 20% drubbing during the previous outing, as Saudi billionaire

Prince Alwaleed

, the largest individual shareholder in Citi, announced he would raise his stake in the staggering bank to 5% from 4%.

Alwaleed also endorsed Citi CEO Vikram Pandit, saying management is doing all necessary steps to survive the current climate.

Also on the Dow,

Boeing

(BA) - Get Report

said it would lay off 800 workers in a Kansas facility thanks to delays and terminations of various projects.

Bloomberg

reported that industrial conglomerate and Dow stock

General Electric

(GE) - Get Report

was in talks to secure investments from several Asian sovereign wealth funds.

Among technology companies,

Yahoo!

(YHOO)

is still in talks to purchase

Time Warner's

(TWX)

AOL business, according to another report by

Bloomberg

.

Moving on to commodities, crude oil was losing $3.39 to $50.23 a barrel. For a time, oil went below $50. Gold was up $1.10 to $737.10.

Longer-dated U.S. Treasury securities were soaring in price as investors sought safety from the troubled stock market. The 10-year was up 1-21/32, yielding 3.13%, and the 30-year was adding 3-20/32 to yield 3.72%. The dollar was strengthening vs. the euro and pound, but plummeting against the yen.

Across the seas, European exchanges such as the FTSE in London and the DAX in Frankfurt were trading lower. In

Asia

, Japan's Nikkei and Hong Kong's Hang Seng closed with major losses.