Stocks tumble on recession signs

By Jennifer Coogan

Major indexes tumbled 2 percent in a broad-based decline. But banks and other financial services stocks lost heavily on worry the service-sector slowdown portrayed in the Institute for Supply Management data would crimp demand for loans and capital investment.

Insurer American International Group Inc led the decline among the Dow industrials, falling 4 percent on fears about credit exposure. Investment bank Goldman Sachs & Co slid more than 3 percent after a broker downgrade.

The Dow Jones industrial average was down 252.00 points, or 1.99 percent, at 12,383.16. The Standard & Poor's 500 Index was down 28.51 points, or 2.06 percent, at 1,352.31. The Nasdaq Composite Index was down 41.19 points, or 1.73 percent, at 2,341.66.

Exxon was down 2.2 percent at $83.59, making it the top-weighted drag on the S&P.

Technology shares, seen as particularly vulnerable to a downturn in both business and consumer spending, contributed to the market's drop.

Verizon shares fell 4.2 percent to $37.01 while rival AT&T Inc stock dropped 2.8 percent to $37.11 on the NYSE.

The ISM index posted the largest monthly drop since the index began in 1997 and hit the lowest level since October 2001 during the previous recession.