Economic slump and spending woe sink Wall Street

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By Ellis Mnyandu

NEW YORK (Reuters) - Stocks slid on Monday as news pointing to the deepening economic slump around the world punctured last week's market enthusiasm, with financial services companies and retailers among Wall Street's biggest casualties.

Major industrial companies also contributed to losses on signs global demand is faltering, leading investors to pare back risk in favor of safe-haven government debt.

The National Bureau of Economic Research, the arbiter of U.S. business cycles, declared that the United States entered recession in December 2007, ending 73 months of economic expansion.

"Things are looking quite bleak. Everyone acknowledges that," said Brian Gendreau, investment strategist at ING Investment Management in New York. "The question is to what extent is that already priced into the markets. Apparently, not entirely."

The Dow Jones industrial average slid 447.06 points, or 5.06 percent, to 8,381.98. The Standard & Poor's 500 Index tumbled 53.81 points, or 6.00 percent, to 842.43. The Nasdaq Composite Index dropped 94.80 points, or 6.17 percent, to 1,440.77, near its session low.

With the holiday shopping season under way, investors fear that retailers may turn in their bleakest sales in perhaps two decades. The S&P retail index declined 7.1 percent, as shares of department store operator Macy's Inc tumbled 11.7 percent to $6.55.

Shares of Wal-Mart Stores, the world's biggest retailer and a Dow component, shed 4.1 percent to $53.62.

Consumers made repeat trips to stores and spent more on bargains this weekend, but analysts said the rush is unlikely to translate into a much-needed boost in profit.

On Nasdaq, wireless chip maker Qualcomm Inc was the heaviest weight, falling 8.1 percent to $30.85.

Factory activity in the United States fell in November to its weakest since 1982, according to the Institute for Supply Management. For details, see [ID:nL1566758] The data jolted investors, who got news of weaker Chinese and European manufacturing activity earlier in the day.

Among financials, shares of Citigroup sank 16.5 percent to $6.92 on the NYSE after an influential analyst forecast more losses for the major U.S. bank.

A slide in commodity prices pushed resource stocks into the red, with aluminum producer Alcoa, a Dow component, tumbling 10.2 percent to $9.66.

Shares of Bank of America slid 13.2 percent to $14.10. The S&P financial index plummeted 10.2 percent.

Among big manufacturers, Caterpillar Inc plunged 6.7 percent to $38.26 and General Electric slid 7.4percent to $15.90. The market's slide extended a global equity rout that hurt stocks in Asia and drove European indexes down 5 percent or more.

Investors also await Federal Reserve Chairman Ben Bernanke's comments on the economy when the central bank chief delivers a speech on Fed policy in Texas at 1:45 p.m.

A lower close on Monday would snap a five-day streak of gains for the S&P 500.

The yield on the benchmark 10-year U.S. Treasury note sagged to a five-decade low and its price rose as investors sought the safety of government debt.

Shares of energy companies succumbed to gravity as oil prices fell on concerns that the economic slump will hurt energy demand. U.S. front-month crude fell $4.63, or 8.5 percent, to $49.80 a barrel.

Major oil producer Exxon Mobil lost 4.4 percent to $76.64, while rival Chevron slid 6.2 percent to $74.16.

(Editing by Jan Paschal)

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