Updated from 4:09 p.m. EST

Stocks in New York sank Thursday as strong earnings from eBay ( EBAY) and Qualcomm ( QCOM) couldn't stop a data-driven selloff from erasing the previous session's gains.

The Nasdaq Composite gave up 32.04 points, or 1.3%, to 2434.24. The Dow Jones Industrial Average slumped 119.21 points, or 0.94%, at 12,502.56, and the S&P 500 was off 16.23 points, or 1.13%, at 1423.90.

The major indices took a southern detour early in the session after a report on existing-home sales. The National Association of Realtors said home sales fell 0.8% to 6.22 million annualized units in December, below estimates of 6.25 million annualized units. Following the data, the Philadelphia Stock Exchange Housing Sector index fell 2.3%.

Also contributing to the decline was a 2.1% fall in the Amex Oil index and a 2.6% slump in the Philadelphia Oil Service Sector index.

Roughly 3.19 billion shares changed hands on the New York Stock Exchange, and volume on the Nasdaq topped 2.25 billion shares. Decliners beat advancers roughly 3-to-1.

"Jittery investors were quick to take profits when the market rolled over today," said Michael Sheldon, chief market strategist with Spencer Clarke. "It'll be interesting to see, over the near term, how the market responds to a damaging day like this. We could see investors becoming more defensive."

Wall Street was coming off a day in which the major averages rallied, a climb that was spearheaded by gains in Sun Microsystems ( SUNW) and Yahoo! ( YHOO). The Nasdaq surged 34.87 points, or 1.43%, to 2466.28, and the Dow rose 87.97 points, or 0.7%, to 12,621.77, a record high finish.

For its part, Internet auction house eBay did everything it could to keep spirits up. The stock jumped 8.2% to finish at $32.45 a day after the company's adjusted profits beat estimates for the fourth quarter by 3 cents. Revenue climbed 29% to $1.7 billion.

Meanwhile, Qualcomm reported a first-quarter profit of 43 cents a share, excluding items, edging past estimates. Sales of a little more than $2 billion rose 16% from a year ago. However, shares slipped 46 cents, or 1.2%, at $38.16.

Before the new session got started, Nokia ( NOK) continued the positive trend for tech earnings, easily exceeding analysts' quarterly earnings targets. The phonemaker's fourth-quarter sales of $15.2 billion were 13% higher than the same period a year ago. Nokia rose 90 cents, or 4.5%, to $21.11.

Dow component AT&T ( T) posted a fourth-quarter profit of $1.9 billion, or 50 cents a share, up 17% from the year-earlier quarter. Excluding items, the telecom giant had earnings of 61 cents a share, 2 cents ahead of the Thomson First Call consensus. AT&T was higher by 16 cents, or 0.4%, to close at $36.79.

Automaker Ford ( F) said it had a fourth-quarter loss of $5.8 billion, or $3.05 a share, widening from $74 million, or 4 cents a share, a year earlier. Excluding items, Ford had a greater-than-expected loss of $1.10 a share. However, quarterly revenue beat targets, and the stock tacked on 2 cents, or 0.2%, to $8.22.

Bristol-Myers Squibb ( BMY) reported a fourth-quarter loss of $134 million, or 7 cents a share, reversing a year-earlier profit of $499 million, or 26 cents a share. Excluding items, the drugmaker earned 19 cents a share, which beat the consensus of 16 cents a share. Revenue also topped estimates, but Bristol-Myers was off by 71 cents, or 2.6% to finish at $26.28.

Elsewhere, defense contractor Northrop Grumman ( NOC) said fourth-quarter net income jumped 37% to beat forecasts, and rival Lockheed Martin ( LMT) posted quarterly earnings that rose 28% and also topped targets. Still, Northrop was lower by 0.7% to $71.30, while Lockheed added 0.3% to end the session at $97.44.

Among analyst changes, UBS upgraded Broadcom ( BRCM) to buy from neutral, and Citigroup raised its rating for Corning ( GLW) to buy from hold. Shares of both Broadcom and Corning rose 1.2%.

In the retail sector, Banc of America Securities raised both Best Buy ( BBY) and Abercrombie & Fitch ( ANF) to buy from neutral. Best Buy dipped 1%, while Abercrombie finished off by 0.1%.

Away from stocks, Treasury prices were dropping. The 10-year note was down 14/32 in price to yield 4.87%, and the 30-year bond was easing by 23/32 to yield 4.96%. The dollar rose vs. the yen and the euro.

Commodities were mostly lower. Crude oil futures fell $1.14 to end at $54.23 a barrel, and natural gas plunged 51 cents to $6.90 per million British thermal units. Gold eased by 10 cents to close at $654.40 an ounce, and silver gained 22 cents to $13.49 an ounce.

Returning to the economic front, the Labor Department said initial jobless claims rose by a larger-than-expected 36,000 to 325,000 claims last week. The less volatile four-week moving average added 1,500 to 309,250.

Ian Shepherdson, chief economist with High Frequency Economics, said the initial claims data "are still very volatile, and the next couple of weeks could easily spring further big surprises."