Stocks slide as Bernanke confirms economic stress

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By Charles Mikolajczak

NEW YORK (Reuters) - Stocks tumbled on Monday as economic reports showing further evidence of the worsening global economic climate were backed up in comments from Federal Reserve Chairman Ben Bernanke.

In a speech in Austin, Texas, Bernanke said the U.S. economy remained under considerable strain and noted that policy-makers must be ready to take action.

"I didn't really think he told us a lot, but he reinforced the fact that things are looking pretty dire at the moment," said Frank Lesh, futures analyst and broker at FuturePath Trading LLC in Chicago. "The Fed will have to use all of their capabilities going forward including, but not limited to, future rate cuts."

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

The Dow Jones industrial average fell 448.66 points, or 5.08 percent, to 8,380.38. The Standard & Poor's 500 Index dropped 51.83 points, or 5.78 percent, to 844.41. The Nasdaq Composite Index was down 89.70 points, or 5.84 percent, at 1,445.87.

With the holiday shopping season in full swing, investors fretted that retailers may compile their weakest sales in possibly two decades. The S&P retail index declined 7.2 percent, as shares of department store operator Macy's Inc fell 13.3 percent to $6.43 and Sears Holdings dropped 8.1 percent to $33.33.

Dow component Wal-Mart Stores, the world's largest retailer, slid 3.4 percent to $53.96.

Consumers made repeat trips to stores and spent more on bargains this weekend, but analysts said the rush is unlikely to bolster lackluster sales.

On the Nasdaq, wireless technology supplier Qualcomm Inc was the top drag, falling 7.8 percent to $30.97.

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

Among financials, shares of Citigroup sank 13.8 percent to $7.16 on the NYSE after an influential analyst forecast more losses for the major U.S. bank.

Shares of Bank of America slid 10.5 percent to $14.54. The S&P financial index shed 9.5 percent.

Among big manufacturers, Caterpillar Inc tumbled 7.2 percent to $38.06 and General Electric slid 6.6 percent to $16.04. The market's slide extended a global equity rout that hurt stocks in Asia and drove European indexes down by over 5 percent or more.

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

Energy companies' shares showed weakness as oil prices dropped on concerns that the economic slump will curb demand. U.S. front-month crude fell $5.15, or 9.5 percent, to settle at $49.28 a barrel.

Major oil producer Exxon Mobil lost 3.9 percent to $77.05, while rival Chevron slid 5 percent to $75.11.

(Editing by Jan Paschal)

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