After a one-day respite, stocks continued their downward trajectory Thursday, hampered by yet more disappointing corporate news, mixed economic data and caution ahead of some high-profile earnings due after the bell.

"There's not really anywhere to hide," said Ben Hovermale, head trader at Wells Capital Management. "This is just more of the same."

The

Dow

industrials ended down 132, or 1.56%, to 8409. The

Nasdaq

was down 40, or almost 3%, to 1356 and the S&P 500 was off by 24, or 2.7%, to 881.

Losses were broad-based with chip, consumer and financial stocks all off by 3% or more. The software sector saw the heaviest selling, falling 5%, with

Siebel Systems

(SEBL)

plunging 18% after its second-quarter earnings and revenues fell short of analysts' estimates.

Microsoft

(MSFT) - Get Report

was down 2% ahead of its

results.

Future Imperfect

So far, about a third of the

S&P 500

companies have reported second-quarter results, and 61% of those have exceeded the consensus estimates. Just 12% have missed. Still, companies continue to issue downbeat assessments about the rest of the year.

Nokia

(NOK) - Get Report

and

Philip Morris

(MO) - Get Report

were among those issuing cautious outlooks Thursday.

"We said enjoy the second-quarter numbers but don't enjoy them too much because we felt that expectations for the third and fourth quarters were too high," said Chuck Hill of Thomson Financial First Call. "You put that together with all the scandals and it's pulling

prices down."

Reports of accounting improprieties at

America Online

(AOL)

and news that the firm's chief operating officer would resign added to the downward pressure in the market. AOL fell 5% to 12.41. Meanwhile, various news sources reported

WorldCom

(WCOME)

may file for bankruptcy as early as next week.

Still, the news wasn't universally bad.

IBM

(IBM) - Get Report

was up 2% after saying it should meet estimates for the rest of the year (albeit through some unusual accounting adjustments). In addition,

Dell

(DELL) - Get Report

, which raised guidance last week, reaffirmed those numbers, and

Sprint

(FON)

surprised investors by narrowing its quarterly loss.

That Morose Feeling

In the current environment, however, such news wasn't enough to bolster investors' spirits. After today's action, the Dow is inching closer to its September lows while the Nasdaq continues to languish at a five-year low. The technology-laden index is down a whopping 73% from its peak in March 2000.

Although a number of analysts point to the economy as a source of hope, few investors were inspired by Thursday's data.

First-time claims for jobless benefits fell 28,000 in the latest week to an 18-month low of 379,000. But the Labor Department cautioned investors not to read too much into the drop, noting that claims are typically volatile at this time of year.

Meanwhile, the leading economic indicators were unchanged in June, according to the Conference Board. Adding to the gloomy sentiment was a big drop in the Philadelphia Fed survey, which plunged to 6.6 from 22.2 in June, the lowest reading this year and far below expectations of 18.4.

Economists had a mixed reaction to the data, with some expressing disappointment while others said the sample of firms surveyed is too small to be considered a reliable measure of manufacturing activity in the region.

Amid all the pessimism, the S&P Investment Policy Committee said in its weekly research note Thursday that the potential rewards of investing in the stock market outweigh the risks over the next 18 months.

"There are many signs that indicate a counter-trend rally to this vicious bear market is near," the firm said.

Although previous market bottoms have occurred during massive capitulations, with many sentiment indicators moving as one, "the current downtrend can be described as a rolling capitulation, where one after another sentiment indicator moves to a bearish extreme," S&P added.