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NEW YORK - US stocks tumbled Friday amid a panic-driven global market rout, on rising fears of a worldwide recession that will slam a wide range of industries.
The Dow Jones Industrial Average slumped 312.30 points (3.59 percent) to close at 8,378.95, in a volatile session that saw the blue-chip index down as much as 500 points.
The market action capped a week with a drop of more than five percent for the benchmark Wall Street index.
But New York averted the meltdown in some markets such as the 9.6 percent Tokyo plunge earlier Friday and losses of around 5.0 percent in Europe.
The tech-heavy Nasdaq shed 51.88 points (3.23 percent) to 1,552.03 and the Standard & Poor's 500 index dropped 31.34 points (3.45 percent) to 876.77.
The losses came amid a wave of panic in markets around the world as mounting evidence signaled that major economies are heading for recession from a credit crunch and banking crisis.
It also came 79 years after the "Black Thursday" of October 24, 1929 that was the first wave of selling in the market crash of that year.
The rout came on "fears of global recession weighing heavily on company profits," according to Jason Kunkel at Moody's Economy.com.
Al Goldman at Wachovia Securities said the plunge was the result of forced selling by hedge funds that are using borrowed cash and which must meet redemptions.
"The main cause is that hedge funds are being forced to liquidate positions because they are so leveraged due to credit default swaps," he said.
"Estimates run to 30 to 40 times leveraged. This is forced selling, not an investment judgment call."
Others said the crisis was deepening.
"We have now reached a point where fundamentals and long-term valuation considerations do not matter any more for financial markets," said economist Nouriel Roubini at New York University.
"What matters now is only flows -- rather than stocks and fundamentals -- and flows are unidirectional as everyone is selling and no one is buying as trying to buy equities is like catching a falling knife."
The global slide came after a profit warning from Japanese electronics giant Sony and a similar bleak outlook from US tech giant Microsoft.
French auto giants PSA Peugeot-Citroen and Renault ordered huge production cuts, while Europe's biggest airline Air France-KLM issued a profit warnings.
Chrysler LLC, the number three US automaker, meanwhile said it would cut up to 5,000 administrative and temporary jobs by the end of the year.
Still, some analysts said the market may be getting close to the so-called capitulation that shakes out the last of the sellers.
"The worse and more volatile it gets, the closer the market is to a bottom and a turn," said Bob Dickey at RBC Wealth Management.
"Markets do not bottom on good news. They bottom when the news is not only bad, but the expectations are even worse."
Among stocks in focus, Citigroup slid 7.40 percent to 12.14 dollars and Bank of America shed 8.39 percent to 21.07 as the banking sector took the brunt of the market turmoil.
National City Corp., a struggling regional banking group, fell 24.36 percent to 2.08 dollars after agreeing to be taken over for 5.6 billion dollars by PNC Bank, up 4.57 percent at 59.48 dollars.
Oil giant ExxonMobil lost 0.44 percent to 70.08 dollars and rival Chevron skidded 3.15 percent to 64.67 dollars amid a further drop in crude oil prices, which fell as low as 61 dollars a barrel in London.
Microsoft lost 1.61 percent to 21.96 dollars after the biggest software maker met a profit forecast but offered a weak outlook due to an uncertain global economy.
Bonds offered no relief for the market. The yield on the 10-year US Treasury bond rose to 3.697 percent from 3.534 percent Thursday and that on the 30-year bond increased to 4.087 percent against 3.969 percent. Bond yields and prices move in opposite directions.
- AFP /ls
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