Wall Street Slammed Amid Consumer Worries

Dow Plunges 680 Points On Tepid Holiday Shopping Data, Confirmation That U.S. Is In Recession

(CBS/ AP)  The reality that the nation is indeed in recession and that the downturn may well be prolonged sent Wall Street plunging Monday, hurtling the Dow Jones industrials down nearly 700 points and wiping out more than half of last week's big gains. All the major indicators fell more than 7 percent, with the Standard & Poor's 500 index down nearly 9 percent.

The market spent the day absorbing a litany of bad news that convinced investors that the optimism that fed a 1,276-point gain in the Dow over five sessions was premature. Stocks first slid on initial reports that the first weekend of the holiday shopping season, while better than some retailers and analysts feared, saw only modest gains. That had Wall Street worried that the rest of the season would be disastrous, a troubling thought not only for retailers but for an economy that is dependent on consumer spending for its growth.

The markets haven't been this volatile in almost 80 years, reports CBS News correspondent Anthony Mason. For the past 50 days, the S&P 500 has whipsawed up and down an average of nearly 4 percent every day - that hasn't happened since the late 1920's.

"It's just one of these markets that's just floating back and forth and we're back on the down side," Alan Valdes of Hilliard Lyons told Mason.

According to figures released by RCT ShopperTrak, a research firm that tracks total retail sales at more than 50,000 outlets, sales over Friday and Saturday rose just 1.9 percent.

Meanwhile, downbeat economic reports on the manufacturing sector and construction spending only added to investors' concerns. Speeches from Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson also did little to assuage investors about the downturn.

The day's news reminded investors, who last week were buying on a burst of optimism, that the economy is still in serious trouble. Then, at midday, Wall Street got confirmation of what everyone has suspected for months, that the nation is indeed in a recession. The National Bureau of Economic Research, considered the arbiter of when the economy is in recession or expanding, said the U.S. recession had begun a year ago, in December 2007.

That assessment made the retail sales figures all the more unnerving.

"Unfortunately, two-thirds of the American economy is based on the spending of the American consumer," said Mike Stanfield, chief executive of VSR Financial Services. "When the consumer pulls back, it's very hard for the economy to gain much traction."

Investors had been hopeful that last week's rally - when the major indexes shot up by double digit percentages - was a sign that some stability had returned to a market badly shaken by months of discouraging economic data. But analysts expect economic concerns to weigh on the market for some time to come.

"Everyone knows the recession is on us, the question is now will it be short and shallow or long and severe," Stanfield said.

Chuck Widger, chief executive of investment management firm Brinker Capital, expects the volatility to continue until investors have better visibility on the future.

"Investors are looking for better data on the economy," he said. "We've got baked in pretty nasty assumptions for the economy this quarter. The markets are looking ahead to the first quarter for data that will confirm or deny the bad news."

Although Monday's plunge was notable because it cut short a five-day rally - the first such winning streak for the Dow and the Standard & Poor's 500 index since July 2007 - it also fit what has become a pattern on Wall Street. The market has made a number of big, optimistic moves higher, including triple-digit gains in the Dow, only to quickly give them back as another batch of bad news arrives.

According to preliminary calculations, the Dow Jones industrial average fell 679.95, or 7.70 percent, to 8,149.09. The S&P 500 index dropped 80.03, or 8.93 percent, to 816.21, while the Nasdaq composite index fell 137.50, or 8.95 percent, to 1,398.07.

Only 218 stocks were in positive territory on the New York Stock Exchange with 2,693 declining. Volume came to 1.62 billion shares.

The Russell 2000 index of smaller companies fell 56.07, or 11.85 percent, to 417.07.

Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.76 percent from 2.92 percent Friday. The yield on the three-month T-bill, considered one of the safest investments and an indicator of investor sentiment, slipped to 0.02 percent from 0.05 percent Friday. The lower the yield, the more anxious investors tend to be.

The market received no relief after a pair of speeches from Paulson and Bernanke about the economy.

Paulson said the administration is looking for more ways to tap a $700 billion financial rescue program and will consult with Congress and the incoming Obama administration. The program has distributed $150 billion out of the $250 billion earmarked to buy stock in banks as a way to boost their resources so they can lend more.

He said the administration is looking at other ways to utilize the rescue package, including alternatives for providing capital to financial institutions.

Meanwhile, Bernanke said in another speech Monday that further interest rate cuts are "certainly feasible," but he warned there are limits to how much such action would revive the economy. The central bank's key interest rate now stands at 1 percent, a level seen only once before in the last half-century.

Many economists predict policymakers will drop the rate again at their next meeting on Dec. 15-16. And, there have certainly been enough weak economic news to compel the Fed to make another cut.

There was no shortage of disappointing economic news on Monday. The Institute for Supply Management, a trade group of purchasing executives, said its index of manufacturing activity fell to a 26-year low in November. Meanwhile, the Commerce Department said construction spending fell by a larger-than-expected amount in October.

Stanfield also said investors have lost some confidence in recent moves by the government to bolster the financial system. "The financials are still lagging, which in my opinion shows a lack of confidence in (Treasury Secretary) Paulson and the undertaking of the Fed and the Treasury," he said.

Analysts say investors have been frustrated by the government's change in strategy as it implements its $700 billion financial bailout program; the Treasury originally said it would buy soured mortgage debt from banks, then decided to buy stock in the banks. Last week, with the rescue of Citigroup Inc., the government again said it was buying the bank's failed debt.

The government injected a fresh $20 billion into the banking giant and said it would guarantee up to $306 billion of the bank's risky assets. Banking stocks were among the biggest sectors pulling the overall market down on Monday.

Citigroup tumbled $1.84, or 22.2 percent, to $6.45. Morgan Stanley shares dropped $3.40, or 23.1 percent, to $11.35. Goldman Sachs Group Inc. fell $13.23, or 16.7 percent, to $65.76.

Retailers were among the day's poorest performers. Wal-Mart Stores Inc. fell $2.87, or 5.1 percent, to $53.01, while JCPenney Co. tumbled $2.44, or 12.8 percent, to $16.55.

One of the silver linings on the dark cloud of recession is the rapid fall in the cost of energy, reports CBS Radio News' Dan Raviv. Demand for fuel is down with a slower economy and a further slowdown expected.

Oil now costs one third of what it was this past July. After OPEC failed to agree on production cuts, the price of oil fell by almost 10 percent, Raviv reports. Light, sweet crude dropped $5.15 to settle at $49.28 a barrel on the New York Mercantile Exchange.

The Organization of the Petroleum Exporting Countries, which accounts for about 40 percent of global supply, reduced output quotas in October by 1.5 million barrels a day.

The dollar fell against other major currencies. Gold prices also fell.

Overseas, Japan's Nikkei stock average fell 1.35 percent. At the close, Britain's FTSE 100 was down 5.19 percent, Germany's DAX index was down 5.88 percent, and France's CAC-40 was down 5.59 percent.

[patalbo]

lady_organs
Get your head out. They aren''t even in office yet.
Prolonged illegal war has a greater effect than a president that has net even been sworn into office.

[perceptions5]

This worthless DEMOCRAT Congress took their eye off their MAIN responsibility, the Economy. (presidents run wars, hence "Commander-in-Chief)

This Do Nothing DEMOCRAT Congress instead conducted daily "political lynchings" and "endless votes on US troop withdraws from Iraq" (Does everyone STILL remember that?)

That''s ok the Democrats........................aka the new "Master Party" has their friends and fellow fascists in our MSM wolfpack press and their lying and misleading propaganda.

Weclome to NAZI America......................the "Master Party" is in control................(of your mind and thoughts, too)

[shanev137]

All these media explanations as to why the stock market is now trading in a flat channel (going up 1000 points, then dropping 1000 points, then going up 1000) are all total BS.

These 1000 point swings are the only way traders can make money trading.

Think about it.

[demdump]

Stock fall more than 600 point after Obama unveiled his team.

[cruzn66]

perceptions5, Congress legislates, it IS THE RESPONSIBILITY OF THE WHITE HOUSE TO ADMINISTRATE THE GOVERNMENT ACCORDING TO THAT LEGISLATION!!!!!!NOT WRITE PRESIDENTIAL OVERRIDES AS THE BILL IS SIGNED!!! TIME TO REVIEW YOUR U.S.CONSTITUTION before you blog your ignorance for all to see!!!!

[demdump]

If Obama continue to unveiled his team , our stocks market will crash to 1,000 point...

[easeup-2009]

Posted by lady_organs at 01:15 PM : Dec 01, 2008

The steelhead trout are running now, but it''s so fricking cold.....

[cruzn66]

The comments given by some of the Republican neocons on here only confirms why the media writes for a sixth grade reading level.

[incog-nito]

Don''t worry. The government will announce another bailout soon (using your money, of course). That should prop the market back up for at least a couple of days.

[noloyalisti]

Let''s seize the assets of the rich criminals who robbed us blind under Bushoccio. I think they can live on a mere $5 million a year, we can grab the other $45 mil.

[smirk5]

"The fundamentals of our economy are strong"
John McCain
Sept. 15, 2008

"You''ve heard of mental depression; this is a mental recession,"
"We have sort of become a nation of whiners,"

Phil Gramm
July 10, 2008

[cheetah-man7]

How is it that investors are suddenly panicking over the "R" word today? We''ve been in "R" now for quite some time - why is the official word bringing Wall St. down almost 700 points? We have some pretty stupid investors out there. No wonder this country is on the verge of bankruptcy! And thank God, we are almost rid of a Republican administration.... Less than 2 months to go before we can start afresh.

[easeup-2009]

Let''''s seize the assets of the rich criminals who robbed us blind under Bushoccio. I think they can live on a mere $5 million a year, we can grab the other $45 mil.

Posted by noloyalisti at 04:25 PM : Dec 01, 2008

Or, you could work hard & make your own money.

[easeup-2009]

And thank God, we are almost rid of a Republican administration.... Less than 2 months to go before we can start afresh.

Posted by Cheetah-Man7 at 04:27 PM : Dec 01, 2008

Were you crediting Republicans when the DOW cracked 14,000?

[centerfall94]

More evidence of criminal negligence and misconduct by the Bush administration and the neocons. Thanks, losers and traitors, you''ve left us a real mess for Obama and the real Americans to clean up.

Bush''s trial at the Hague should be VERY entertaining.

[cheetah-man7]

Demdump - please see a doctor for your psychological disorder. I believe they have medication to assist with your dillusional thinking that dems are the bad guys. Perhaps you need shock therapy ?

[demdump]

Don''''t worry. The government will announce another bailout soon (using your money, of course). That should prop the market back up for at least a couple of days.

Posted by incog-nito

So what is diffrent between Bush''s Bail out and Obama Bail out ?? CHANGE WHAT ???

[deadmaverick]

HEADLINE: THE HANNITY RECESSION CONTINUES...

Yes, this is the Hannity recession- caused by the stale and nauseating broken-record-player fairy tales of Mr. I-Wish-I-Was-A-Journalist, the sidekick of Alan Colmes...Let not your hearts be troubled- all the delusional fringe righties can stand together and be mavericky at his upcoming Where Are They Now concerts...........

[demdump]

Obama Presents his team , and stock went down 700 point. heh heh

[cheetah-man7]

And thank God, we are almost rid of a Republican administration.... Less than 2 months to go before we can start afresh.

Posted by Cheetah-Man7 at 04:27 PM : Dec 01, 2008

Were you crediting Republicans when the DOW cracked 14,000?


------------------------------------------------------

Posted by easeup
---------------------

Greed and stupidity is what made the Dow reach 14,000. I credit stupid investors who believed that a $60,000 home would become worth $600,000 by pure magic. The 14,000 point structure was the last defiant yelp from a nation bent on using their credit cards to finance their Dom Perignon habits. These same folks are now in the drive-up windows of McDonalds ordering happy meals for themselves.

[deadmaverick]

Demdump needs a lesson in how the stock markets work, heh heh, DUH

[easeup-2009]

HEADLINE: THE HANNITY RECESSION CONTINUES...

Yes, this is the Hannity recession- caused by the stale and nauseating broken-record-player fairy tales of Mr. I-Wish-I-Was-A-Journalist, the sidekick of Alan Colmes...Let not your hearts be troubled- all the delusional fringe righties can stand together and be mavericky at his upcoming Where Are They Now concerts...........

Posted by deadmaverick at 04:35 PM : Dec 01, 2008

Wow. You need professional help.

[deadmaverick]

Demdump needs to realize that stocks were falling before Obama won the election, heh heh heh...

[torva-2009]

Were you crediting Republicans when the DOW cracked 14,000?

Posted by easeup at 04:29 PM : Dec 01, 2008

Nope that was Bill Clinton''s fault...

P.S. shouldn''t you be packing for Dubai, along with all of your other NEOLOSER groupies?!?!? Don''t let the door hit you in the behind - ''cause you''d probabaly sue!

[demdump]

needs to realize that stocks were falling before Obama won the election, heh heh heh...


Posted by deadmaverick

STOCK JUST FALL TODAY , HEH HEH

[easeup-2009]

Greed and stupidity is what made the Dow reach 14,000. I credit stupid investors who believed that a $60,000 home would become worth $600,000 by pure magic. The 14,000 point structure was the last defiant yelp from a nation bent on using their credit cards to finance their Dom Perignon habits. These same folks are now in the drive-up windows of McDonalds ordering happy meals for themselves.

Posted by Cheetah-Man7 at 04:36 PM : Dec 01, 2008

Nice try. I''m sure at the time you were saying 14,000 was only because we were in a credit bubble. I''m sure you were saying it was a bad, bad thing the market was up, only I believe you were just saying that because of political myopia.

[generey]

I LUV the pic''s of the traders; mummy mummy mummy! WAH WAH WAH!!!!!!!!!!!! Too funny! GO BEECH GO!

[deadmaverick]

Demdump needs to brush up on economics and stock market reactions, heh heh heh heh heh, it was announced today that the economy is officially in a recession, heh heh heh, but the republitards blame it on Obama of course, heh, heh, heh, heh

[easeup-2009]

Were you crediting Republicans when the DOW cracked 14,000?

Posted by easeup at 04:29 PM : Dec 01, 2008

Nope that was Bill Clinton''''s fault...

P.S. shouldn''''t you be packing for Dubai, along with all of your other NEOLOSER groupies?!?!? Don''''t let the door hit you in the behind - ''''cause you''''d probabaly sue!

Posted by torva at 04:38 PM : Dec 01, 2008

Clinton''s fault that the market hit 14,000 last year??

BWAHAHAHAHAHAHA!!!!!!!!!!!!!! You have GOT to be the DUMBEST drooler I have ever seen on here.

[demdump]

Posted by deadmaverick

Stock market react after Obama Presents his team HEH HEH HEH So tell OBama to stop before the market crash HEH HEH

[deadmaverick]

Looks like the republitards skipped the lesson on basic economics.....its Clintons fault!! its Obamas fault!!! Its Jesus'' fault!!! What would Jesus do? He would praise himself that the republitards will be stepping aside to let the clean-up crew in on Jan. 20.

[neonink]

I know.... let''s act like we never heard the word recession before today.

Surprise!

While it may have started Dec 07, the gurus were talking us into way before that.

[deadmaverick]

Dumdump- step one: take a course on business/economics and look at the economic data released over the last two months...step two: get a dictionary and learn some grammar, PLEASE!!!! Its really telling when those who post most loudly around here have the worst grammar and punctuation

[shanev137]

"The fundamentals of our economy are strong"
John McCain
Sept. 15, 2008


-----------------


that comment was the one that nailed his coffin door shut.

[hk4u2]

Let''s face it. The democrats had the majority the last two years and ample oppertunity to over turn the sitting duck president. But instead the did nothing. Sitting back and being ignorant. Now that their elected Lone Rider turns into nothing but a Pinnochio it''s too late to react. The fat lady has sung and the chit is hitting the fan. The market has shown how much confidence the money people have in the Great Ohbeemie ----------- NONE. Only good thing in this mess is that a capable person in bach in charge aka Hillary. You that voted for the Great Ohbeemie fell for a very well presented illusion. The illusion of change. LOL. Man, did you get screwed or what? ;-)

[torva-2009]

BWAHAHAHAHAHAHA!!!!!!!!!!!!!! You have GOT to be the DUMBEST drooler I have ever seen on here.

Posted by easeup at 04:42 PM : Dec 01, 2008

You should look in a mirror first before posting and removing all doubt about just how stupid you and your fellow NEOLOSERS are...for the last 8 years you guys have been blaming Clinton for everything...

[citizenusa-2009]

We are in a recession? Duh, ya think?

[torva-2009]

Posted by HK4U2 at 04:53 PM : Dec 01, 2008

True the Democrats have had a majority in congress from 2006...but you conveniently forget before that there was 12 years of Republican controlled congress...and that means there is a lot of elephant turds that have to be cleaned up!

[hk4u2]

Time for these investing sheep to start thinking about the country they live in and invest in alternative energy, wind, solar, hydroelectric,etc.


--------------------------------------------------------------------------------

Posted by karlagolay

If you had brains you would realize that even with incentives, the pay backs on the technolgy are just not there. Even if we take all the BS that the Great Ohbeemie is producing and try to turn it into methane, it is still not a viable option.

[shanev137]

he market has shown how much confidence the money people have in the Great Ohbeemie ----------- NONE.

-------------


He''s not even the president yet, you *******.

[hk4u2]

Big Yawn you stupidass. Howe big was that "majority" again.

You RINOBumpkins are a hoot.


--------------------------------------------------------------------------------

Posted by FloydZeppd

Ity appears that your intelligence adjusts with the market. Let''s hope for you that we get out of this mess by 2012.

[deadmaverick]

The R-Tards always find someone to pin the blame on- never trying to solve the problem, all they do is blame, blame, blame...Once their boy lost, they started shooting down Obama and his cabinet before they even took office!!!

[deadmaverick]

Its a great thing that Palin is campaigning for Chambliss- she was the greatest gift the Dem party ever received...heres to hoping that she is the gift that keeps on giving....at least shes good for comedy once in a while now that Hannity is nothing more than a crybaby going through the stages of grief (anger, denial, denial, anger, etc.)

[donevis-2009]

Is this really any surprize to anyone? Who in their right mind other than shot selling players would attept to invest in this volitial market. The cloths and hides of normal inversters has been stripped and thrown to the wolves. Only the players have anything left to gamble and that''s because they''re betting with other peoples money. The market ticker is no longer a sign of economic status, it''s a score card for the naked short players. They''re the only ones making any commision. Soon they to will be in the soup line.

[shanev137]

Posted by lady_organs at 05:00 PM : Dec 01, 2008

Exactly. We need to start manufacturing all of our own *** we buy from China.

[hk4u2]

He''''s not even the president yet, you *******.


--------------------------------------------------------------------------------

Posted by shanev137

Although your simple minded response amuses me, it shows clearly you intellectual frame of mind or the lack there off. For if you would follow the market reaction to everything the Great Ohbeemie does, thus far things have only going one way ---- DOWN. You can not BS investors with tons of words saying nothing but need to present a viable and profitable solution. Neither one has been presented to date and I bet we will never see one.

[blazercoach1]

How is this possible? I mean, just last week the media was all over the appointment of Geithner to the Treasury and how this caused the DOW to sky-rocket. Does this mean that the appointment of Hillary and Gates is causing the stockmarket to plummet? HMMMM....

Of course, no idiot would believe that.....but I suspect some idiots DID believe the appointment of Geithner boosted confidence last week....especially because the liberal-suck-up media kept serving it......

[berniew4]

It is really amazing how many do not feel any MISERY INDEX. It is more important to laugh at our political opponents, blame every one for economy collapse and laugh when you are right. It means no one care about the hurt people. POOR MIDDLE CLASS or Wealthy. It is more important to be right and *** TO all who disagree and let them be hurt. WHO CARES . I was right !!

[carpriddler]

Many leading companies no longer produse a product. Newspapers without writers. Phone, cable, and internet companies that provide nothing but a service that is substandard. An auto industry that pays employees not to work. Bureaucrats that spend their entire career as dysfunctional troublemakers protect by unions. Government contractors and kickbacks. The American banking industry is analogous to the old mafia. Politicians, crooked cops, and the worst of all is the idiot saying %u201Clove it leave it%u201D.

[hk4u2]

How big was that "majority" again, Bumpkin Boy?

What a hoot you RINOs are.....


--------------------------------------------------------------------------------

Posted by FloydZeppd

It''s Mr.Pumpkin for you for it appears that based on your spelling you can not be older than 5.