(By Salman - iStockAnalyst Writer)

US stocks finished lower on Thursday as shares of healthcare companies fell sharply on worries over impact of President Barack Obama's overhaul of the medical system.      

The Dow Jones Industrial Average slumped 88.81 points or 1.22% to finish at 7,182.08. The S&P 500 dropped 12.07 or 1.58% to 752.83. The Nasdaq Composite retreated 33.96 points or 2.38% to 1,391.47.

A steady barrage of dismal economic data pressurized stocks. A release by Department of Labor on Thursday showed number of Americans filing first- time claims for unemployment benefits jumped 36,000 to 667,00 in the week ending February 21. It is the highest level for jobless claims since October 1982. Economists had forecast jobless claims to drop to 625,000. The four-week average of seasonally adjusted initial jobless claims, a less volatile gauge, increased by 19,000 to 639,000.  Continuing claims for the week ending February 24 climbed 114,000 to a record 5.11 million.

According to Department of Commerce, orders for durable goods fell 5.2% in January. Economists on average had projected a decline of 2.5%.

In a separate report released on Thursday, Commerce Department said that sales of new homes fell 10.2% in January to a record-low seasonally adjusted annual rate of 309,000.

Investors sold off shares of health-care companies on concerns U.S. President Barack Obama's budget proposal would hurt the profits. Johnson and Johnson (NYSE: JNJ) tumbled $1.52 or 2.82% to $52.44. Merck (NYSE: MRK) sank $1.87 or 6.70% to $26.04. Pfizer (NYSE: PFE) was down 38 cents or 2.91% to $12.70. Abbott Laboratories (NYSE: ABT) slumped $3.04 or 5.67% to $50.58. Humana Inc. (NYSE: HUM) slid $5.72 or 19.48% to $23.64.

The biggest US student loan company SLM Corp. (NYSE: SLM) plummeted $2.59 or 30.87% to $5.80 on Obama's call for an end to government subsidies for student loan providers.

Financials trimmed their early advance after FDIC said that number of "problem" banks jumped to 252 in the fourth quarter compared to 171 in previous quarter. Citigroup Inc. (NYSE: C) fell 6 cents or 2.38% to $2.46. Bank of America (NYSE: BAC) rose 16 cents or 3.10% to $5.32.JP Morgan (NYSE: JPM) soared $1.32 or 6.07% to $23.05. Wells Fargo (NYSE: WFC) rallied 96 cents or 7.14% to $14.40.

General Motors (NYSE: GM) plunged 17 cents or 6.67% to $2.38 after the embattled automaker reported that its fourth quarter net loss widened to $9.6 billion, or $15.71 a share, from a loss of $1.5 billion, or $2.70 a share, in the prior year quarter. On an adjusted basis, the company lost $5.9 billion, or $9.65 in the latest quarter.Revenue decreased to $30.8 billion from $46.8 billion.The company said that it burned $6.2 billion of cash in the fourth quarter as the slump in auto industry deepened. .

Airplane maker Boeing Co. (NYSE: BA) slipped $1.20 or 3.54% to $32.71.

Tech bellwether International Business Machines Corp. (NYSE: IBM) jumped $3.07 or 3.57% to $88.97 after reaffirmed its earnings guidance for 2009.

Late on Wednesday, Fluor Corp. (NYSE: FLR) reported that its fourth quarter earnings fell 27% to $190.1 million or $1.04 per share from $259.5 million or $1.41 per share for the year-ago quarter. Revenue jumped 29% to $6.07 billion from $4.71 billion. Shares of the company climbed $1.95 or 5.92% to $34.90.

Salesforce.com (NYSE: CRM) rose 45 cents or 1.60% to $28.55 after it reported that fourth-quarter soared to $13.8 million or 11 cents a share from $7.4 million or 6 cents a share in the corresponding period in 2007. Revenue rose to $289.6 million from $216.9 million.

Royal Bank of Scotland on Thursday posted annual net loss of 24.1 billion pounds, or $34.2 billion — 61 pence a share, or 86.6 cents a share compared to a profit of 7.3 billion pounds, or 75.7 pence a share in 2007.

European stocks settled up. The U.K. FTSE advanced 66.66 points or 1.73% to close at 3,915.64. The German DAX and French CAC gained 2.51% and 1.76% respectively.

Asian stocks finished lower. The Nikkei 225 fell 3.29 points or 0.04% to 7,457.93. The Hang Seng index of Hong Kong slipped 110.14 points or 0.85% to 12,894.4.  

NYMEX crude oil for April delivery climbed $2.72, or 6.4% to settle at $45.22 a barrel.
 
Disclosure: Author does not own any of the stocks discussed here.