YAHOO: Volatility continued Thursday as the Dow turned an early 1.5% loss into a 3.3% gain, but then saw the advance fade into a 3.2% loss when the index fell to its session low. The Dow rallied late in the session to finish 2.0% higher.

Exxon Mobil (XOM 70.39, +5.82) provided the Dow and the energy sector (+6.6%) with leadership during the session. The integrated oil giant posted a strong advance as oil rebounded 3% off its 16-month low to trade near $69 per barrel.

Oil is down by more than 50% from its July high as slower economic growth threatens to undercut demand for the commodity. With oil prices down so dramatically, OPEC is expected to announce production cuts at its emergency meeting tomorrow.

Slower growth expectations also have many companies cutting jobs. Jobless claims for the week ending Oct. 18 rose 15,000 to 478,000, surpassing 468,000 claims that were expected. The four-week moving average actually dipped to 480,250 from 484,750, but a 10th consecutive month of nonfarm payroll declines is expected.

Weekly jobless claims came the same session that The Wall Street Journal reported Goldman Sachs (GS 108.58, -6.13) and Xerox (XRX 7.71, -0.27) will be cutting their workforces, and Dow Jones indicated that General Motors (GM 6.10, -0.09) will also be implementing layoffs of salaried employees. The cuts follow similar announcements in recent sessions from companies like Merck (MRK 28.85, +0.84) and Yahoo! (YHOO 12.65, +0.26).

With unemployment at elevated levels and economic headwinds stiff, spending on discretionary items is expected to wane. As such, online retailer Amazon.com (AMZN 50.32, +0.33) issued a tepid outlook for the fourth quarter. Despite strong earnings per share results, the disappointing outlook led investors to push shares sharply lower early on.  They rallied at the close. 

In other earnings news, Altria Group (MO 19.58, +0.29), UPS (UPS 48.13, +1.74), and Dow Chemical (DOW 24.43, +2.32) all topped earnings expectations for the third quarter. Bristol-Myers (BMY 18.05, +0.52), Eli Lilly (LLY 33.48, +1.37), and Amgen (AMGN 55.55, +5.85) also posted better-than-expected earnings. However, Amgen was the only company in the bunch to provide an optimistic outlook; its shares saw the largest gains.

In the end, eight of the ten economic sectors posted an advance.  However, decliners in the S&P 500 had a slight edge over advancing issues.DJ30 +172.04 NASDAQ -11.84 SP500 +11.33 NASDAQ Adv/Vol/Dec 759/3.14 bln/2007 NYSE Adv/Vol/Dec 1166/1.69 bln/1935