U.S. stocks plummeted nearly 700 points on Monday amid increased concerns about the slumping global economy.
The Dow Jones industrial average was down 679.95 points, or 7.7 percent, to end unofficially at 8,149.09, based on the latest data. The Standard & Poor's 500 index was down 80.05 points, or 8.93 percent, to finish unofficially at 816.19. The Nasdaq composite index was down 137.50 points, or 8.95 percent, to close unofficially at 1,398.07.
Financial services companies and retailers were among Wall Street's biggest losers, with Wal-Mart, Macy's, Sears, Citigroup and Bank of America sliding.
Earlier Monday, the National Bureau of Economic Research said the United States has been in a recession since December 2007. The news capped another day of gloomy economic news that sent stocks lower.
Federal Reserve Chairman Ben Bernanke said Monday that the U.S. economy is likely to remain weak for some time, and that policymakers must react decisively to stimulate the economy and end the recession that has gripped the United States for the past year.
Another report released Monday showed that factory activity in November fell to its lowest level since the 1981-82 recession, and there was also a steep drop in homebuilding.
Speaking in Austin, Texas, Bernanke said further interest rate cuts beneath the Federal Reserve's current target of 1 percent for its benchmark overnight funds rate were feasible, but the Fed also will use other unconventional measures to aid growth.
"Although conventional interest rate policy is constrained by the fact that nominal interest rates cannot fall below zero, the second arrow in the Federal Reserve's quiver — the provision of liquidity — remains effective," he said.
Bernanke said the Fed could directly purchase longer-term securities issued by the U.S. Treasury or government-sponsored agencies in order to influence yields and stimulate demand.
U.S. Treasury prices rose sharply on his remarks, pushing yields to their lowest in five decades.
Meanwhile, Treasury Secretary Henry 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.
Paulson said 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.
U.S. manufacturing, meanwhile, shrank at its fastest pace since June 1980, according to a report released Monday by the Institute for Supply Management, a Tempe, Ariz.-based trade group of purchasing executives.
A 50 on the institute's Purchasing Manager Index is the dividing line between expansion and contraction in the manufacturing sector. November's figure was just 36.2, down 2.7 percentage points from October. It was the fourth consecutive monthly drop.
New orders were also down for the 12th straight month in a sign that the downward trend is unlikely to turn around anytime soon.
A similar picture is emerging in Europe, where factories across the continent put in their worst performance in November since private survey records began more than a decade ago. Manufacturing also tumbled in China in November.
New Commerce Department data also show that construction spending fell 1.2 percent in October following an unchanged reading the previous month as home construction posted its biggest drop in three months.
From NPR and wire reports
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