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New claims for jobless benefits rose more than expected last week, exceeding even gloomy expectations for an economy stuck in a recession that seems to be deepening.

The Labor Department reported Thursday that initial applications for jobless benefits in the week ending Dec. 6 rose to a seasonally adjusted 573,000 from an upwardly revised figure of 515,000 in the previous week. That was far more than the 525,000 claims Wall Street economists expected.

Elsewhere, the U.S. trade deficit rose unexpectedly in October as a spreading global recession dampened the once-strong sales of American exports and the volume of oil imports surged by a record amount, the Commerce Department said.

More layoffs were announced Thursday. New Britain, Conn.-based tool maker Stanley Works (nyse: SWK - news - people ) said it plans to cut 2,000 jobs and close three manufacturing facilities, while Sara Lee Corp. (nyse: SLE - news - people ), known for food brands such as Jimmy Dean and Hillshire Farm, said it will cut 700 jobs as the Downers Grove, Ill.-based company outsources parts of its business.

New jobless claims last week reached their highest level since November 1982, though the labor force has grown by about half since then.

The trade deficit rose to $57.2 billion in October, from an imbalance of $56.6 billion in September. Analysts had been looking for the deficit to decline to $53.5 billion on lower oil prices. Oil prices did drop by a record amount, but that was offset by a record surge in the volume of oil imports.

The reports, along with investor concerns that an auto bailout bill may not pass the Senate, sent stock markets slightly lower. The Dow Jones industrial average fell about 15 points in morning trading.

Government reported a much higher than expected 533,000 jobs evaporated, and the jobless rate reached 6.7%, from 6.5% in October.

Equities stumbled in New York Tuesday afternoon, surrounding their morning gains and briefly turning negative before positive momentum built up in the final hour of trading to lock in a snapback rally.

Automakers were in focus virtually from the outset, after Ford Motor (nyse: F - news - people ) revealed the viability plan it sent to Congress. According to the plan, Ford believes it can be profitable by 2011, and is only requesting a $9.0 billion emergency credit facility as hedge against prolonged pressure on the economy and U.S. consumers. Ford's survival roadmap helped set off a rally, but the gains were thwarted when figures on domestic auto sales began to trickle out.

Ford said its November sales dropped 30.6% year-over-year, while General Motors (nyse: GM - news - people ) recorded a 41.3% drop and Chrysler said sales fell 30.0%. The automakers have cited the lack of credit available to consumers for auto loans as one reason for the pain in the industry, and the impact was not felt only by Detroit's carmakers. Sharp declines in U.S. sales were also reported by Japanese automakers Toyota Motor (nyse: TM - news - people ) and Honda Motor (nyse: HMC - news - people ), which said sales fell 33.9% and 31.6%, respectively.

The afternoon fade was canceled out in the final hour of trading though, as stocks returned to their best levels of the day before the closing bell. The Dow Jones industrial average finished with a gain of 270 points, or 3.3%, to 8,419; the S&P 500 added 33 points, or 4.0%, to 849; and the Nasdaq was up 52 points, or 3.7%, to 1,450.

Late in the session, Ford was up 6.3%; American depositary receipts of Toyota 5.9%; and Honda ADRs 3.5%. GM, which perked up to a gain of 4.1% just before the close, is said to be requesting $12.0 billion from Congress, according to TradeTheNews.com. (See "What GM Will Look Like, If It Survives.")

General Electric (nyse: GE - news - people ) was the biggest winner among the blue chips, despite warning that fourth-quarter profits will come in at the low end of its forecast due to restructuring charges associated with the downsizing of GE Capital. Investors brushed aside the news to focus on GE's decision to maintain its healthy 31 cent per share dividend, which yields more than 7.0%. GE shares were up 14.3% heading toward the close. (See "First Aid For GE's Financial Arm.")

Crude oil settled at $46.96 a barrel Tuesday, losing $2.32, as worry over an extended U.S. recession combined with a skeptical view toward OPEC's ability to drive prices higher.

Applications for unemployment benefits soared to the highest level since just after the Sept. 11, 2001, terrorist attacks while the trade deficit shrank more than expected as demand for imports plunged, further evidence of the struggling U.S. economy.

The Labor Department reported Thursday that jobless claims shot up by 32,000 last week to a seasonally adjusted 516,000, the highest total in seven years. The tally was much higher than analysts expected and a further indication of how much the labor market is deteriorating amid the shrinking economy. The government reported last week that the unemployment rate surged to a 14-year high of 6.5 percent in October.

Meanwhile, the Commerce Department said the trade deficit declined by a bigger-than-expected amount in September, falling by 4.4 percent to $56.5 billion as imports experienced a record plunge.

The import decline was led by a huge fall in imported oil as the average price for crude dropped by a record $12.41 per barrel and the volume of shipments fell to the lowest level in five years. But demand for other types of imports also fell, with imported cars and car parts dropping to the lowest level in more than five years, an indication that foreign automakers are feeling the pinch hitting U.S. consumers.

President-elect Barack Obama has said that dealing with the worst financial crisis to hit this country in seven decades will be his No. 1 priority when he takes office, and his Democratic allies in Congress were laying the groundwork for changes with hearings scheduled Thursday.

The House Oversight Committee will examine the role hedge funds may have played in recent market turbulence. Among those scheduled to testify was billionaire investor George Soros, chairman of Soros Fund Management.

Meanwhile, the Senate Banking Committee will hear from executives of a number of financial institutions including Bank of America (nyse: BAC - news - people ), JPMorgan Chase (nyse: JPM - news - people ) and Wells Fargo (nyse: WFC - news - people ) on the issue of how the government's $700 billion rescue effort is operating, and particularly whether the government should be requiring more commitments on the use of the money to address rising mortgage foreclosure problems.

World markets pushed higher Tuesday as America went to the polls and a leading U.S. investment bank told its clients in Europe to buy stocks after the savaging they have taken in the last few weeks.

The Dow Jones index of leading U.S. shares was 203.66 points or 2.2 percent, higher at 9,523.49 even though analysts generally do not believe that one candidate will boost the beaten down market more than the other.

Britain's FTSE 100 index was 116.49 points, or 2.6 percent, higher at 4,559.77, while Germany's DAX was up 133.68 points, or 2.7 percent, at 5,160.52. France's CAC-40 was 92.30 points, or 2.6 percent, higher at 3,620.27.

Most Asian stock indexes were more or less flat, apart from Japan's Nikkei, which surged 537.62 points, or 6.3 percent, at 9,114.60 as the market played catch-up after being closed Monday, when most of Asia rose.

The U.S. presidential election is dominating sentiment in U.S. markets during Tuesday having been an afterthought for much of the last few weeks during the financial crisis.

Opinion polls on the eve of the vote showed that Democratic candidate Senator Barack Obama was leading Republican rival Senator John McCain, and that the Democrats could be on course to take a firmer grip on Congress.

"This election may have attracted a lot of attention in the media, but appears to have the lowest impact on financial markets of any election for many decades, doubtless a recognition that whoever is president, he will inherit a $1 trillion budget deficit and a banking system that has all but failed," said Marc Ostwald, an analyst at Monument Securities.

"Welcome to your worst nightmare, Mr. President," he added.

Also helping European stocks was a note from Morgan Stanley recommending European investors to buy stocks and has reversed its "full house sell signal" of June 2007 to a "full house buy signal". It had been one of the first major investment banks to look for the stock market exit door last year.

European shares have also been boosted by the ongoing decline in interbank lending rates ahead of expected interest rate reductions Thursday from the European Central Bank and the Bank of England.

Both banks are expected to follow the U.S. Federal Reserve's lead and cut interest rates by at least half a percentage point, though there's growing talk that the Bank of England may reduce interest rates by as much as a full percentage point for the first time since four cuts of that size in 1992-3 when Britain's economy was last mired in recession.

Jeremy Batstone-Carr, head of research at Charles Stanley, said Britain's FTSE in particular is rallying as it "gears up for a big cut" by the Bank of England, but added that it will likely peter out soon after the decision as the focus returns on fundamental economic data.

"We are heading into a deep recession and widespread earnings disappointment," he said.

Earlier, Australia's financial stocks improved after the Reserve Bank of Australia slashed rates for the third time in as many months, reducing its cash rate by a larger than anticipated 0.75 percentage points to 5.25 percent. That helped the S&P/ASX 200 index pare earlier losses to close largely flat.

Hong Kong's Hang Seng Index added 0.3 percent to 14,384.34 after fluctuating through the day, with bank shares up as lending conditions eased further.

South Korea's Kospi rose 2.2 percent, while benchmarks in Singapore and Shanghai fell.

In mainland China, the market dropped for a third day, led by mining and metals stocks. The benchmark Shanghai Composite Index slipped 0.8 percent to 1,706.7. Losers included China Shenhua Energy Ltd., the country's biggest coal producer, and Kailuan Clean Coal Ltd.

Oil prices rose, with light, sweet crude for December delivery declining $3.01 to $66.92 a barrel in European trade on the New York Mercantile Exchange.

The dollar rose 0.4 percent to 99.51 yen, but the euro was 1.9 percent higher at $1.2878.