By Jonathan Stempel
Citigroup, a Dow Jones industrial average <.DJI> component,
fell $2.03, or 7 percent, to $27.19 in late afternoon trading.
JPMorgan Chase & Co
The Institute for Supply Management said the U.S. service sector, which accounts for about two-thirds of the nation's economy, unexpectedly fell to 41.9 in January from 54.4 in December, its largest decline ever. A reading below 50 indicates contraction. The report reinforced some investors' belief that the first recession since 2001 has arrived.
Compounding the problems was a $724 million fourth-quarter
loss reported Tuesday by GMAC, the finance company owned
largely by Cerberus Capital Management LP
Downgrades could further reduce the market value of the
complex debt, resulting in further losses in the wake of more
than $100 billion of write-downs at such companies as Citigroup
and Merrill Lynch & Co
Finance companies came under pressure Monday as brokerage
downgrades of American Express Co
An economic recession could speed up the already rising pace of defaults by borrowers, hurting companies with large consumer and business loan books. Many large banks predicted slow economic growth for 2008, especially in the year's first half, but most were not counting on an actual recession.
(Additional reporting by Jennifer Coogan, Pedro Nicolaci da Costa, Chelsea Emery, Doris Frankel, Justin Grant, Richard Leong and Nick Zieminski)
