The stock market ended down on Thursday as market participants were reminded of two key issues that have hindered the global economic recovery.

The market plunged in the morning as investors digested the grim headlines. Although stocks have pared much of the losses in the afternoon session, the three U.S. indices still ended down for the day.

The S&P 500 Index closed down 2.31 points, or 0.21 percent, at 1,102.93. The Dow Jones Industrial Average lost 53.13 points, or 0.51 percent, to close at 10,321.03. The Nasdaq Composite lost 1.68 points, or 0.08 percent, to end at 2,234.22.

European indices, which closed before sentiments improved, fared worse. The German DAX closed down 1.48 percent and the U.K. FTSE 100 close down 1.21 percent.

The Friday session of the Asian market, which opens Thursday night in New York, has most indices trading up for the day.

U.S. health insurance firms were fairly resistance to declines as prospects look dim for President Obama's healthcare reform efforts.

Wellpoint (NYSE:WLP), the health insurance provider that was previously grilled for its rate hikes, closed up 2.18 percent.

As fears eased, the basic materials sector also rallied in the afternoon session, with the Dow Jones U.S. Basic Materials Index closing at a gain of 0.47 percent.

Reports of widespread demonstrations and pockets of civil unrest reminded the market of the challenges facing Greece's budget slashing ambitions.

A statement from S&P, the rating agency, sparked fresh fears that Greek sovereign debt may be downgraded. S&P stated that within a month, it may downgrade Greece's debt one to two notches.

An unexpectedly high unemployment claims report, released at 8:30 am EST, also reminded investors of the grim U.S. job market, confirming Fed Chairman Bernanke's concerns.

Greece Woes

Greece woes have come back to haunt global markets. When the austerity measures were first announced, some analysts doubted their feasibility and Greek unions immediately threatened strikes.

On Wednesday, Greek workers staged the largest strike to date. Reports of civil unrests also surfaced as some protestors rioted and clashed with the police.

To further complicate the situation, Greece is set to report on its deficit cutting progress on March 16. If the country does not meet its targets, European officials threaten to demand additional cost cutting measures.

Pat O'Hare, Chief Market Analyst of Briefing.com, is not surprised that Greece's fiscal situation is bubbling to the surface again.

The issue was not put to rest as there is still a lack of concrete details from the EU on how it would actually go about providing support for Greece.

He is also concerned that the looming downgrade from S&P and Moody's will adversely affect credit conditions for Greek businesses and consumers.

As holders of Greek sovereign debt, Greek banks post them as collateral to the European Central Bank (ECB) in order to receive loans. Should the ratings on Greek sovereign debt fall below certain regulatory thresholds, they will no longer be considered as acceptable collateral by the ECB.

Disappointing U.S. data

U.S. unemployment claims exceeded forecasts for the second week.

The reported claims were 496,000 while economists were only expecting 461,000. Last week, the reported figure was 474,000 while economists were expecting 440,000.

Fed Chairman Bernanke and Bank of England Governor Mervyn King have both voiced concerns this week over their respective country's grim job market.

The job market remains quite weak, with the unemployment rate near 10 percent and job openings scarce, said Bernanke.

January orders for durable goods, excluding transportation, fell 0.6 percent while economists expected a 1 percent increase.

A particularly troubling sector was machinery. Its shipments fell 6.2 percent and new orders fell 9.7 percent.

Manufacturers of industrial machinery initially reacted sharply to the report. Caterpillar (NYSE:CAT) fell 4.5 percent early in the morning session.

However, as investors digested the news and fears subsided, Caterpillar rallied to trade down only 0.30 percent for the day.

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