US 'recession' sends stocks diving

2 Dec 2008, 7:34 am   -   Source: SBS staff and agencies
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Further recession fears have sent US stocks plummeting (Getty)

Further recession fears have sent US stocks plummeting (Getty)

Global stocks have plummeted, after an official panel confirmed the economy has been in recession since December 2007.

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The Australian stock market opened lower in early trade, after Wall Street plunged overnight amid bleak economic news.

US stocks have plummeted, after an official panel confirmed the economy has been in recession since December 2007.

The comments have sparked fresh worries amid the global financial crisis.

The Dow Jones Industrial Average sank 680.67 points (7.71 per cent) to 8,148.37 at the closing bell, which would represent the fourth-steepest point loss in history for blue chips.

The Nasdaq composite plummeted 137.50 points (8.95 per cent) to 1,398.07 and the broad-market Standard & Poor's 500 index sank 80.04 points (8.93 per cent) to a preliminary close of 816.20.

Stocks extended opening losses, after a panel of economists charged with the official designation of business cycles said the world's largest economy has been in recession since December 2007.

The Business Cycle Dating Committee of the National Bureau of Economic Research says it made the determination during a conference call on Friday.

"Economic growth figures have outlined the worst global recession since at least the 1980s while gauges of inflation expectation point to growing deflation fears across the G7," said Lena Komileva, an analyst at brokerage Tullett Prebon in London, referring to the Group of Seven rich countries.

A deluge of economic data and company reports Monday suggested economic growth was slowing in powerhouse emerging markets China and India and reinforced expectations of a deep recession in advanced economies.

In the US, a survey from the Institute of Supply Management showed a weaker-than-expected reading while separate data showed construction spending down 1.2 percent in October.

The ISM index fell 2.7 points to 36.2 percent, the weakest since May 1982.

"Manufacturing is in a tailspin and the outlook is grim," said Ryan Sweet at Economy.com.

Global stock markets had soared last week as governments rolled out measures to stimulate the global economy and fight against the credit problems in the financial sector.

But like many times since the start of the financial crisis in mid-2007, a euphoric rally has been followed by a brutal correction.

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