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AFP - Tuesday, December 2 NEW YORK (AFP) - - Wall Street stocks plunged Monday, giving back most
of their gains from the past week, amid bleak economic news from around
the globe including confirmation of a recession in the United States.
The Dow Jones Industrial Average sank 679.95 points (7.70 percent) to
close at 8,149.09, in the fourth-steepest point loss in history for the
blue-chip index. The Nasdaq composite plummeted 137.50 points (8.95 percent) to 1,398.07
and the broad-market Standard & Poor's 500 index sank 80.03 points (8.93
percent) to 816.21. A pullback was expected after a huge snapback rally over the past
several sessions, with the Dow posting its best five-day percentage
increase since 1932 of 17 percent. But selling began early and quickly
became a freefall. Market action came as the economic panel recognized as the arbiter of
business cycles said the US had entered recession in December 2007 based
on its measure of income, employment and other factors. "The market has gotten off to a tough start to the week today, as
recession fears have now become a reality, and the questions that remain
are just how bad and for how long this recession will linger over us,"
said Michael Fowlkes, analyst for the online investment service
Investors Observer. Also, a survey of the manufacturing sector showed the weakest conditions
since 1982. European markets were also sharply weaker, as the rally from last week
came to a grinding halt after news of deeper economic woes in Germany,
France and the full 15-nation eurozone and weak data from India and China. Jocelynn Drake at Schaeffer's Investment Research said the market
responded to "a round of weak economic data around the globe that has
stoked concerns that we may not have seen the worst of the economic
slowdown." Fresh data released on Monday showed German retail sales fell 1.6
percent in October from the previous month, while in France a closely
watched index of manufacturing activity fell to 37.3 in November, its
worst-ever reading. In China, manufacturing activity hit a three-year low in November,
underlining the fallout of the global financial crisis on emerging markets. Meanwhile, India's exports in October tumbled 12 percent from a year ago
for the first time in three years, hit by slumping demand in its key US
and European markets. Augustine Faucher at Moody's Economy.com said the confirmation of a US
recession by the National Bureau of Economic Research only added to the
gloom. "The important questions now are when will the recession end and how
severe will it be," he said. "Moody's Economy.com expects the current downturn to last through the
first half of 2009 and to be the worst of the post-World War II era.
Even with a substantial stimulus package, unemployment is likely to peak
close to 9.0 percent in early 2010." The bond market set more records as investors flocked to safety. The 10-year US Treasury bond yield fell to 2.719 percent from 2.957
percent Friday and that on the 30-year bond dropped to 3.236 percent
against 3.487 percent. Bond yields and prices move in opposite directions. Among stocks in focus, Alcoa slid 13.48 percent to 9.31 dollars and
ExxonMobil shed 7.29 percent to 74.31 dollars on concerns about falling
commodity prices. Citigroup tumbled 22 percent to 6.45 dollars, handing back much of its
gains from an 18 percent rally following the government bailout of the
banking giant a week ago. Elsewhere in the sector, Bank of America
declined 20.9 percent to 12.85 and JPMorgan Chase shed 17.5 percent to
26.12 dollars. Yahoo lost 6.7 percent to 10.74 dollars as markets mulled reports that
the struggling Internet giant might seal an alliance on search
advertising with Microsoft, down 7.96 percent at 18.61. Ford gave back early gains and fell 5.2 percent to 2.55 dollars as the
sputtering automaker said it was studying the sale of its Volvo Car unit
to cope with weakening sales.
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