4:15 pm : The tone during Thursday trade was pessimistic from the start. Losses were wide and deep, worsening as the session progressed. The major indices closed near session lows, each shedding at least 3%.  In turn, stocks marked the largest single session drop since late June.

Participants focused on the worst as mixed economic and sales data hit the wires.

The ISM Service Index came in at 50.6 for August, suggesting expansion since it is above 50. Economists were expecting a reading of 49.5. Still, the survey received little attention.

Jobless data trends continue to suggest a soft labor market as weekly claims climbed 15,000 to 444,000. Economists expect the employment report to show further weakening when it is released tomorrow. The ADP report offered a glimpse into that report, suggesting private payrolls fell by 33,000 during August.

On the upside, weak labor conditions help limit inflation. Yet that theme was ignored as labor costs inched 0.5% lower in the second quarter. Also helping stymie inflationary pressure, productivity increased 4.3%, up from the previously stated 2.2%.

Though soft labor conditions help diminish inflationary pressures, they can also eat into discretionary spending. Several apparel retailers posted a substantial downturn in their August same-store sales results. Limited Brands (LTD 20.71, -1.35), Pacific Sunwear (PSUN 6.45, -0.45), Abercrombie & Fitch (ANF 50.99, -3.72), and Gap (GPS 19.14, -0.83) all saw comparables slide.

However, Guess (GES 38.71, +0.46) gave an upside surprise when it posted better-than-expected earnings and sales results for its latest quarter.  That