By Sung Moss

NEW YORK (TheStreet) -- Stock losses accelerated, tumbling to their session lows Thursday as European debt contagion fears continued dragging down the major market averages, and as many domestic retailers reported broadly underwhelming results in April.

The Dow Jones Industrial Average was trading lower by 124 points, or 1.1%, to 10,744. The S&P 500 was down by 17 points, or 1.4%, at 1149, while the Nasdaq dipped 39 points, or 1.6%, at 2364.

Eurozone contagion fears picked up again Thursday, souring investors' moods and sending markets roiling for yet another day. Moody's Investor Service said the banking systems in several European nations including Italy, Spain, Ireland, Portugal and Britain could be stung as sovereign debt woes intensify, according to The Associated Press. Those lingering doubts put a damper on the euro, as the dollar hit a new 14-month high against the currency.

Market participants remain skittish about the ramifications from a series of uncertainties coming out of Europe. German legislators are scheduled to vote on the bailout measure Friday, all while Greek lawmakers moved to pass a set of austerity measures today. Even parliamentary elections in Great Britain are adding to the irresolute mood.

And while uncertainty swirled in the eurozone, the European Central Bank announced it kept its key interest rate unchanged at 1%, as expected. But during a press conference following the announcement, it was widely reported that ECB President Jean-Claude Trichet said central bankers didn't discuss the buying of government bonds as a part of their meeting.

"The hopes were that this IMF/German bailout would be the rescue for Greece and the euro currency. But if you look at credit spreads, that's clearly not the case," said Michael Pento, senior market strategist at Delta Global Advisors. "I think this reminds me too much of the summer of 2007 when we first saw the Bear Stearns hedge funds collapse. I think this is the first salvo of a metastasizing sovereign debt crisis that will spread," also saying the contagion could go beyond Europe and into Asia and the U.S.

"It's a very real crisis," he said. "I'm afraid over the next few years here it's going to come to America. And I guarantee you this -- there is no IMF bailout coming to the U.S."

Overseas, Hong Kong's Hang Seng lost 1% while Japan's Nikkei shed 3.3%. The FTSE in London fell 1.5% and the DAX in Frankfurt was lost 0.8%.

A day before the U.S. government is scheduled to release its April nonfarm payrolls report, investors began digesting the Labor Department's initial jobless claims data for the week ended May 1. The government said new filers edged lower last week by 7,000 to 444,000. Economists were expecting claims to dip to 440,000, from the 448,000 pre-revised tally, according to consensus figures provided by Briefing.com.

For Friday's report, economists are projecting April job growth of 187,000 after March's increase of 162,000 jobs. But Delta Global's Pento said there's a strong chance the market will not see a lift from tomorrow's jobs news because of the European overhang.

The government also said productivity climbed up at a seasonally adjusted 3.6% annual clip in the first quarter, though consensus estimates were looking for a 2.4% increase. The rise is slightly off the revised 6.3% gain in the fourth quarter.

Retail same-store sales data for April came in largely below predictions. According to a gauge from TheStreet, 16 of 26 retailers missed expectations. Costco(COST), Nordstrom(JWN), Macy's(M) and Limited Brands were some of the better performing concerns in the tracker, though teen retailer Hot Topic(HOTT) and Abercrombie & Fitch(ANF) posted more lackluster results.

Abercrombie shares were tumbling 8.3%, while Hot Topic was shedding 4.9%.

The Energy Information Administration said natural gas storage levels in the lower 48 states saw an injection of 83 billion cubic feet for the week ending April 30. The tally landed at the upper end of an estimate range offered by Platts saying analysts estimated an additional 80 to 84 billion cubic feet to natural gas stocks. Stocks now stand at 1.995 trillion cubic feet, which is 5.1% above the year-ago level and 18.8% ahead of the 5-year average.

Federal Reserve Chairman Ben Bernanke spoke in Chicago in the morning where he discussed lessons learned from the bank stress test program one year ago.

Cigna(CI) reported first-quarter earnings that rose 36% on improvements across its global health service businesses. Adjusted income from operations came in at $1.01 a share. Analysts had been expecting a profit of 90 cents a share.

Alcatel-Lucent (ALU) , the telecommunications-equipment maker, reported a wider first-quarter loss of 515 million euros ($658 million) compared with a year-earlier loss of 402 million euros as part shortages crimped sales.

Transocean(RIG), the owner of the now infamous oil rig that sank in the Gulf of Mexico and unleashed a torrent of crude into the ecosystem, reported earnings largely in-line with expectations late Wednesday. But an SEC filing released yesterday also said officials from both the Department of Homeland Security and the Interior Department have opened an investigation on the accident. Shares were trading 5.2% lower today.

Bank of America(BAC) and Caterpillar(CAT) were the chief laggards on the Dow, while McDonald's(MCD) was leading a small handful of positive blue-chips.

Kraft Foods(KFT) was trading 1% lower ahead of its first quarter earnings announcement due late today.

Natural gas futures began selling off further after the reported storage injection, as the June delivery contract was recently dipping nearly 10 cents at $3.89 per million British thermal units. The firming greenback was weighing on oil prices again today, as crude for June delivery was slipping $1.41 at $78.56 a barrel.

The weakened euro was also having an effect elsewhere in commodity markets, as the June gold contract surged $22.40 to trade at $1,197.40 an ounce.

The dollar was trading higher against a basket of currencies with the dollar index up by 0.5%.

The benchmark 10-year Treasury added 23/32, pushing the yield down to 3.460%.

The two-year note improved 4/32, diluting the yield to 0.809%. The 30-year bond gained 1 15/32, lowering the yield to 4.307%.