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Stocks fell hard Thursday, as Citigroup got downgraded and economic data disappointed. The Dow Jones Industrial Average dropped 362.14 points (-2.60%), Standard & Poor's 500 index traded 40.92 points lower (-2.64%), and the Nasdaq fell 64.29 points (-2.25%). Volume on the NYSE was significant during the sell-off at 1.7 billion, and decliners trounced advancers by a ratio of about 7:1.

CIBC announced Thursday it was downgrading Citigroup (-6.9%) because it sees the company having to raise $30 billion to deal with current and future losses from the credit crisis (full story). To raise the money, CIBC said the bank would either have to sell assets or lower its dividend. Merrill Lynch (-5.8%), Morgan Stanley (-7.2%), and other large banks were rocked by the news as well. Exxon Mobil (-3.8%) announced it had missed analysts' estimates because of weak refining margins (full story).

The Commerce Department announced consumer spending and personal income grew as expected, but economists are not forecasting strong consumer spending growth in the fourth quarter (full story). The Institute for Supply Management announced its manufacturing index came in at 50.9, short of estimates of 52. The number was the lowest since March. The 10-Year U.S. Treasury jumped 31/32 in price, dropping the yield to 4.35%.

Every sector experienced losses of at least 1% Thursday, with financials (-3.7%) and basic materials (-4.0%) getting hurt the most. Crude traded above $96, but ended down $1.04 to $94.53/barrel. Sprint (-3.0%) fell on poor third-quarter results (full story). Altria (-1.4%) announced it would acquire John Middleton Cigars for $2.9 billion (full story). Crocs (-36.1%) was pummeled on disappointing sales numbers (full story).

The jobs report (8:30 AM) and factory orders (10:00 AM) are expected to be out Friday. Unless the jobs number blows away expectations, look for only a small bounce, and the sellers to stay in control.

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Source: Thursday Wrap – Dow -2.60%, S&P -2.64% NQ -2.25%