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NEW YORK: Wall Street stocks plunged on heightened recession fears on Wednesday for the US and global economies, as panic selling returned to global markets.
The Dow Jones Industrial Average slid 733.08 points (7.87 percent) to close at 8,577.91 in the worst one-day point loss since last month's record 777-point decline and the steepest percentage drop since 1987.
In an even more brutal decline, the broad-market Standard & Poor's index plunged 90.17 points (9.03 percent) to 907.84.
The tech-heavy Nasdaq sank 150.68 points (8.47 percent) to 1,628.33 in another violent session for stocks, despite massive rescue efforts for the ailing global banking sector.
"The stock market is buried by recession fears," said Al Goldman at Wachovia Securities.
"Today's culprit is the growing fear that the economic slump may turn into a more significant contraction as the credit squeeze of the past month begins to show up in the data," analysts at Charles Schwab said in a market update note.
"Retail sales fell much more than expected, and a survey of manufacturing registered a steep drop. Economically sensitive companies are leading the broad-based rout."
Markets convulsed around the globe as the London FTSE 100 index of leading shares shed 7.16 percent while in Paris the CAC 40 fell 6.82 percent and the Frankfurt DAX gave up 6.49 percent.
Market action came on news that US retail sales slumped 1.2 percent in September, a sign of deeper troubles for an economy ailing from a financial market firestorm and tight credit.
The drop in sales was the steepest since August 2005 and weaker than market expectations for a 0.7 percent decline.
"The retail sales data highlighted the market's most pressing concern now, which is the direction of the economy," said Gregory Drahuschak at Janney Montgomery Scott.
"The credit market situation remains in flux, but traders in many cases are looking beyond this and wondering how long a slowdown will last and how deep it will be."
Carl Weinberg, chief economist at High Frequency Economics, said that even if credit flows are restored, the troubles are not over.
"The world economy is still headed into a recession despite the global financial market rescue effort," Weinberg said.
"The decline will be deep and protracted. It has already started. Nowhere is the economic house in greater disorder than Euroland, although some may argue that Japan is a bigger mess."
Investors took profits in Asia and Europe after stocks ended lower on Wall Street on Tuesday, despite news that Washington would inject up to 250 billion dollars into ailing banks to help end the worst financial crisis since the 1930s.
"While the government's steps to restore the health and credibility of the banking system were absolutely essential, we didn't see an immediate big response in the credit markets," said Fred Dickson, analyst at DA Davidson & Co.
"It appears too early to conclude that the banks are starting to lend to each other and the credit crisis is a thing of the past. In the meantime, we continue to believe that the stock market will remain volatile. We don't see investors flocking back to the stock market on the buy-side until they begin to see more tangible signs that the economy is beginning to function more normally."
Among stocks in focus, JPMorgan Chase slid 5.8 percent to 38.49 dollars even after posting better-than-expected profits for the third quarter. Wells Fargo, which also beat profit estimates, lost a modest 0.51 percent at 33.35 dollars.
Computer chip giant Intel skidded 5.9 percent to 14.99 dollars after its profit report on Tuesday topped most forecasts.
Among other key shares, ExxonMobil slid 13.9 percent to 62.35 as crude prices extended their decline. Rival Chevron shed 12.5 percent to 59.98 dollars.
Caterpillar, an economically sensitive maker of heavy equipment, tumbled 11.5 percent to 42.06.
Bonds rallied on a flight to safety, with the yield on the 10-year US Treasury bond easing to 4.011 percent from 4.023 percent on Tuesday and that on the 30-year bond falling to 4.248 percent against 4.260 percent. Bond yields and prices move in opposite directions. - AFP/de
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