Wall Street slides with economy

Wall Street slides with economy

New York: US stocks tumbled on Monday as news pointing to the deepening economic slump around the world erased much of last week’s sharp gains, with financial services companies and retailers among Wall Street’s biggest casualties.

Adding to the market’s woeful day, the arbiter of US business cycles declared that the United States entered recession in December 2007 and Federal Reserve Chairman Ben Bernanke said the US economy remained under considerable strain.

Early in the session, data showed factory activity in the United States fell in November to its weakest since 1982, according to the Institute for Supply Management. The data jolted investors, who got news of weaker Chinese and European manufacturing activity earlier in the day.

The Dow Jones industrial average dropped 679.95 points, or 7.70%, to 8,149.09. The Standard & Poor’s 500 Index slid 80.03 points, or 8.93%, to 816.21. The Nasdaq Composite Index lost 137.50 points, or 8.95%, to 1,398.07.

Monday’s lower close snapped a five-day winning streak for the S&P 500.

Shares of the largest US banks tumbled as investors feared the dramatically slowing economy will undercut their businesses as the credit crisis simmers.

Citigroup sank 22.2% to $6.45 after an influential analyst forecast more losses for the major US bank.

Shares of Bank of America slid 21% to $12.85. The S&P financial index shed 17%.

Black Friday, the traditional start of the holiday shopping season when retailers wrack up their biggest sales, began with a whimper. Investors fear that retailers may turn in their bleakest sales in perhaps two decades. The S&P retail index declined 9.3%, as shares of department store operator Macy’s Inc tumbled 13.6% to $6.41.

Consumers made repeat trips to stores and spent more on bargains this weekend, but analysts said the rush is unlikely to translate into a much needed profit boost.

Adding to the sullen tone, the National Bureau of Economic Research declared that the United States entered recession late last year, ending 73 months of economic expansion.