(RTTNews) - Wall Street is bracing for another decline at the start of Thursday’s session, as the hopeful sentiment that carried stocks into the new year has been dashed by renewed worries about the economy.

Overseas markets are losing ground and investors in the U.S. are worried about further corporate warnings and that Friday’s monthly employment report will be worse than the already dismal numbers that are expected.

Stocks fell on Wednesday, as concern about the labor market and some dour corporate outlooks sparked fears that the economy may not yet have bottomed.

Computer chip maker Intel (INTC) said it would miss already lowered quarterly targets, due to further weakness in demand and inventory reductions by customers. Time Warner (TWX) also issued a warning, saying it now expects to report a net loss for full year 2008 due in part to a $25 billion impairment charge in the fourth quarter.

The Dow closed down 245.40 points or 2.7 percent at 8,769.70, the Nasdaq closed down 53.32 points or 3.2 percent at 1,599.06 and the S&P 500 closed down 28.05 points or 3 percent at 906.65.

On Wednesday, payroll processor ADP released its private sector employment report for the month of December before the start of trading, showing that non-farm private employment fell by 693,000 jobs following a revised decrease of 476,000 jobs in November.

This was seen as a precursor to the closely-watched government employment data set to be released on Friday. All indications are that it was another dire month for the labor market, with economists predicting another half million jobs lost during December.

More information on U.S employment is set for release on Thursday, as markets brace for Friday’s report. The U.S. Labor Department will announce data on weekly initial jobless claims statistics, which measure the number of people filing first-time claims for unemployment help, at 8:30 am Eastern Time.

Experts expect jobless claims to surge for the week ended January 8th, after a surprisingly strong decline in the previous week. Claims plunged 94,000 to 492,000 for the week ended December 27, though the size of the decline was probably due to seasonal issues surrounding holiday help.

While the jobless claims data are seen as a good gauge of layoffs, Friday’s monthly employment report is the main focus of people’s attention. In November, there was a loss of 533,000 jobs, which was the worst drop since the mid-1970s.

Meanwhile, President-elect Barack Obama is set to make a what his transition team terms a “major speech” on the economy Thursday, in which he will reportedly urge action on an American Recovery and Reinvestment Plan.

According to Obama’s office, the President-elect will make the case for “urgent action” on a plan he feels will “save or create over 3 million jobs while investing in priorities like health care, energy, and education that will jumpstart economic growth.”

The major Asian markets dropped on Thursday. The fall overnight on Wall Street soured sentiment early in the day, with technology weighed down by Intel’s warning and a gloomy outlook from computer maker Lenovo.

Japan and Hong Kong plunged almost 4 percent, while Taiwan was down more than 5 percent. China and Australia each posted losses of more than 2 percent. The Indian market was closed for a holiday, after falling more than 7 percent on Wednesday following news of an accounting scandal at Satyam Computer Services.

Stocks are losing ground in Europe as well. France’s CAC 40 index is leading the fall among the major equity averages, dropping y 53 points, or 1.6 percent. Germany’s DAX index is down 65 points, or 1.3 percent, and the UK’s FTSE 100 index is off nearly 49 points, or 1.1 percent.

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Posted in Categories: Economy, Releases.

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