Wall Street returned to selloff mode Thursday as the markets were slammed by dire job-loss predictions and an auto industry whose future seemingly hangs in the balance. 

Today’s Market

The Dow Jones Industrial Average lost 215.45 points, or 2.51%, to 8376.24, the S&P 500 slid 25.52 points, or 2.93%, to 845.22 and the Nasdaq Composite fell 46.82 points, or 3.14%, to 1445.56. The consumer-friendly FOX 50 dropped 17.88 points, or 2.60%, to 668.52.

Late-day economic and Detroit fears only added to a day that featured yet more dismal economic news, including continuing jobless claims at 26-year highs and factory orders sinking at the fastest rate in eight years. And Friday's jobs report -- which some fear could show more than 325,000 jobs disappeared last month -- continues to loom over the markets.  

“We have a huge payroll number that everyone is scared of,” said Peter Boockvar, equity strategist at Miller Tabak. “I think if the number is within the range of fearfulness, the market could bounce back because it’s the last major data point of the year.”

Impact from the weak economy was evident as major companies like Merck (MRK), DuPont (DD) and Advanced Micro Devices (AMD) warned of weaker results ahead. Also, scores of new job cuts were unveiled by AT&T (T), Viacom (VIA), Credit Suisse (CS) and DuPont

Big 3 Testimony Spooks Markets

The markets were also slammed by continued uncertainty surrounding the future of Detroit's Big Three auto makers. Even as their executives pleaded with Congress for $34 billion in emergency loans, some experts warned it may not be enough to save the industry.

“If they let these companies languish and there’s no sense of real direction, the investing public will not have a sense of what to do in terms of investing in equity,” NYSE trader Jason Weisberg of Seaport Securities told FOX Business. “They are a linchpin for so many other businesses around the United States and around the world. It’s just a house of cards similar to the financial crisis."

Traders may be fearing the bailout is in jeopardy as shares of General Motors (GM) and Ford (F) plunged late in the day as Thursday's testimony failed to bring a resolution to the matter. Another round of testimony is set for Friday. 

Detroit has warned of a depression if the auto industry collapses. But some experts believe prepackaged bankruptcies with government financing may be the better option. According to Bloomberg News, GM and Chrysler execs are considering this option as a last-resort.

Despite the scary economic headlines and uncertainty surrounding the auto industry, some traders are optimistic thanks to recent unprecedented government intervention, including possibly a new plan to lower mortgage rates and a string of new interest rate cuts overseas. 

"I am sensing a little bit of optimism down here for the first time in a long time... We've been rallying on bad news," NYSE trader Bernard McSherry of Cuttone & Co. told FOX Business. "We've got central banks lowering interest rates faster than a limbo bar in a party full of contortionists." 

Crude Spirals to New Depths

Economic fears were most evident in the commodities markets where crude oil futures plummeted for the fifth consecutive trading day to a level unseen since January 2005. After falling to four-year lows during intraday trading, the price of a barrel ended $3.12 lower to $43.67. In fact, Nymex RBOB gasoline, or wholesale gasoline, ended at 96.95 cents a gallon -- the first settle below $1 in its exchange traded history. 

Crude has lost 20% of its value over the past five days on fears of a global recession. Thursday's selling was also sparked by a Merrill Lynch prediction that crude could plummet below $25 a barrel if the recession slamming the U.S. and Europe spreads to China. 

Retailers Add to the Gloom

While retail sales for November exceeded Wall Street's lowly expectations, they still tumbled 2.1% from a year ago thanks to very low consumer confidence. 

A number of companies reported double-digit declines in November same-store sales, including department store JC Penney (JCP), luxury store Nordstrom (JWN), teen apparel seller Abercrombie & Fitch (ANF), Kohl’s (KSS) and even discount retailer Target (TGT).

As has been the case throughout this downturn, retail king Wal-Mart (WMT) provided one of the only bright spots as the discounter posted a 3.4% rise in sales, topping estimates of a 2.1% increase.

Another positive on Thursday was the housing sector as stocks like Beazer Homes (BZH) and Lennar (LEN) soared on hopes that government intervention will boost new home sales. New reports showed mortgage applications surged by 112% last week and refinancing applications tripled thanks to lower rates. The Treasury Department could announce as early as next week plans to use Fannie Mae (FNM) and Freddie Mac (FRE) to lower rates even further.

Data Dump

The Labor Department said initial jobless claims unexpectedly fell by 21,000 to 509,000 last week but continuing claims, those filed by individuals unemployed for more than one week, jumped by 89,000 to 4.09 million -- the highest level since December 1982. 

The government also said factory orders in October plunged by the fastest rate in eight years. The Commerce Department said total orders slid 5.1%, slightly better than the 5.4% decline economists had forecasted. 

Corporate Movers

Merck (MRK) fell sharply after the drug giant's guidance for 2009 results missed Wall Street's expectations. The Dow component blamed the stronger dollar and little to no sales growth for several top drugs.

Capitol One Financial (COF) announced it will acquire privately-held Chevy Chase Bank in a $520 million cash-and-stock deal, beating out bigger-name banks like Citigroup (C) and JPMorgan Chase (JPM). 

DuPont (DD) warned it will likely post a loss in the fourth quarter, leading the chemicals giant to lay out $600 million in cost cuts for 2009, including cutting 2,500 jobs tied to the troubled automotive and construction sectors. 

AT&T (T) unveiled plans to cut 12,000 jobs, or 4% of its workforce, citing "economic pressures" and efforts to streamline its structure. 

Citigroup (C) senior adviser Robert Rubin and other top execs are willing to forgo their bonuses this year following the government’s $300 billion rescue, the Financial Times reported.

Goldman Sachs’s (GS) plans to expand its wealth management unit could be derailed by a 55.3% plunge in its Goldman Sachs Liquidity Partners 2007 fund, which received $1.8 billion in initial funding, the Financial Times reported.

Williams-Sonoma (WSM) posted a smaller-than-expected quarterly loss of 10 cents per share. 

Nokia (NOK) followed in the recent footsteps of rivals LG Electronics and Research in Motion (RIMM) by warning its fourth-quarter sales will miss expectations.

Toll Brothers (TOL), the luxury homebuilder, narrowed its quarterly loss but warned of sharply lower 2009 revenue. Toll lost 49 cents per share last quarter, beating estimates by 2 cents. 

Credit Suisse (CS) said it will cut 5,300 jobs, or 11% of its headcount. The Swiss banking giant also said it lost $2.5 billion in October and November and said its top execs will forgo 2008 bonuses. 

Viacom (VIA) released plans to slash 850 jobs, or 7% of its workforce, and suspend raises for senior management in 2009 in an effort to save up to $250 million next year from the moves. 

Global Markets

European markets closed slightly lower Thursday after the ECB cut rates by a record 0.75% and the Bank of England slashed rates by 1% to the lowest level in its 400-year history.

The Dow Jones Euro Stoxx 50 Index ended down 9.54 points, or 0.46%, to 2071.74 and London's FTSE 100 fell 6.65 points, or 0.15%, to 4163.61. 

In Asia, Japan's Nikkei fell by 79.86 points, or 1% to 7924.24 while Hong Kong's Hang Seng declined by 78.88 points, or 0.58%, to 13509.78.