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MARKET CLOSE: Employment data chills Wall Street

Blue-chip and technology stocks were roughed up Thursday. The Nasdaq composite tumbled 74 points to 2,146.15, while the Dow Jones industrial average lost 80 points to finish at 10,796.58.

U.S. unemployment applications jumped unexpectedly last week, according to figures released Thursday by the Labor Department.

First-time jobless claims, which give an early reading on the resilience of the labor market, rose by 9,000 to 421,000 in the week ended April 28 from a revised 412,000 in the prior week, the department said. Private economists surveyed by Reuters had expected claims to drop to 400,000.

"The market is very sensitive to negative news on the economy," Jack Shaughnessy, chief investment strategist at Advest told Reuters. "With more and more people losing their jobs, that suggests consumer spending could go down, and that could hurt the economy."

Cirrus Logic's (Nasdaq: CRUS) new strategy outweighed bad news that its revenue would decline. Investors sent shares up $3.62, or 22 percent, to $20.32, and Salomon Smith Barney gave the stock an upgrade Thursday.

Shares of Handspring (Nasdaq: HAND) fell $3.05 to $14.45 after a Lehman Brothers analyst downgraded the stock, saying it could be hurt by pricing pressures. The downgrade comes a day after Handspring's main competitor, Palm (Nasdaq: PALM), said its U.S. retail sales were slipping. Palm shares lost $1.51 to $8.24.

Shares in Macromedia (Nasdaq: MACR) plunged $5.98, or 23 percent, to $20.60 as analysts slashed estimates and ratings for the company following its fourth-quarter report, released Wednesday.

A top Dell Computer (Nasdaq: DELL) executive said Thursday that the company will be "ruthless" about cutting costs, but declined to comment on speculation about more layoffs. Its shares shed $1.80 to $24.93, while Compaq Computer (NYSE: CPQ) and Gateway (NYSE: GTW) slid 55 cents and 62 cents a share, respectively.

Amazon (Nasdaq: AMZN) trimmed 36 cents to $16.75, AOL Time Warner (NYSE: AOL) fell 96 cents to $50.65 and Yahoo (Nasdaq: YHOO) lost $2.09 to $20.83.

Cisco Systems (Nasdaq: CSCO) dipped $1.34 to $18.66, Intel (Nasdaq: INTC) dropped $1.54 to $30.40, Microsoft (Nasdaq: MSFT) shed $1.23 to $68.53 and Oracle (Nasdaq: ORCL) clipped 72 cents to $16.45.

ZDII staff and Reuters contributed to this roundup.