YAHOO: Downbeat economic data, abysmal retail sales, and weak business prospects reminded investors just how tenuous the macro environment has become. Sellers dominated Thursday's action and pushed stocks sharply lower for the second straight session. The two-day slide amounted to a 10.0% loss, the worst two day drop in nearly one month.

Job markets remain loose as claims stand at recession-like levels. Weekly jobless claims for the week ended Nov. 1 totaled 481,000, down 4,000 from the prior week. The weekly number was roughly in-line with the consensus estimate, and the four-week moving average held steady at 477,000. Economists await the October unemployment rate due tomorrow morning.

Nonfarm business productivity rose at a 1.1% annual rate in the third quarter, in-line with expectations. Unit labor costs rose at a 3.6% annual rate, which was more than expected.

With job losses mounting, consumers are less willing to spend their discretionary dollars. In turn, Nordstrom (JWN 15.23, -0.78), Gap (GPS 12.46, -0.38), American Eagle (AEO 10.01, -0.16), and Abercrombie & Fitch (ANF 26.55, -0.23) all reported double-digit declines in October same-store sales.

Wholesalers and discounters like BJ's Wholesale (BJ 36.22, +0.64) and Wal-Mart (WMT 54.47, +0.34) fared better, able to benefit by attracting cash-strapped shoppers to their stores. Both posted increased same-store sales for October.

Retailers haven't been the only companies battling against stiff macro headwinds. Tech bellwether Cisco (CSCO 16.94, -0.45) posted better-than-expected earnings per share results for the latest quarter, but disappointed when it announced it expects revenue to take a downturn.

Challenging business conditions continue weighing on actual earnings results and earnings expectations. Analysts at Morgan Stanley project Goldman Sachs (GS 80.72, -6.71) will post its first quarterly loss since the former Wall Street star went public just over a decade ago.

Declines among financial stocks made them the worst performing economic sector. It shed 6.7% this session and is now just 10.8% above its 52-week low, reached nearly two weeks ago.

After Google (GOOG 331.22, -11.02) walked away from a proposed business alliance with Yahoo! (YHOO 13.96, +0.04), Yahoo stated it is a strategic fit for Microsoft (MSFT 20.88, -1.20). Microsoft offered to pay Yahoo roughly $33 per share earlier this year, but walked away when Yahoo argued the price was too low.

The negative bias among market participants took stocks steadily lower as the session progressed. The major indices finished near their session lows, each down more than 6.5% week-to-date.DJ30 -443.48 NASDAQ -72.94 SP500 -47.89 NASDAQ Adv/Vol/Dec 570/2.39 bln/2191 NYSE Adv/Vol/Dec 538/1.53 bln/2575