By Leah Schnurr
NEW YORK (Reuters) - Wall Street slid on Friday in a global selloff as signs the economic slowdown could be deeper than feared heightened worries over a gloomy corporate profit outlook, forcing institutions to sell stocks to raise cash.
Markets slid worldwide, with the MSCI's all-country world index down 4.9 percent as panicked investors moved to liquidate risky positions. Japan's Nikkei index ended down nearly 10 percent and European shares lost more than 6 percent at one point.
Bellwether IBM Inc was among the biggest drags on the Dow, falling 3.3 percent to $81.54 on the New York Stock Exchange, while Apple dragged on the Nasdaq, sliding 3 percent to $95.28.
Energy companies also tumbled, due to a $3-a-barrel drop in the price of oil on worries that demand for crude will be hit by a global economic slowdown and despite OPEC saying it will cut production.
Stock losses were exacerbated by hedge funds' and mutual funds' forced selling of stocks to raise cash to meet investors' large-scale redemptions, analysts said.
"The largest question I see out there is what's the magnitude of these forced liquidations and how and when do they show up?" said Jim Dunigan, managing executive for investments for PNC Wealth Management in Philadelphia.
The Dow Jones industrial average fell 351.49 points, or 4.04 percent, to 8,339.76. The Standard & Poor's 500 Index gave up 36.23 points, or 3.99 percent, at 871.88. The Nasdaq Composite Index lost 47.91 points, or 2.99 percent, to 1,556.00, off its session low of 1,493.79, which was the Nasdaq's lowest intraday level since May 2003.
U.S. existing home sales rose sharply in September, logging the first year-over-year increase in nearly three years, according to a report from the National Association of Realtors.
Home builders' stocks got a boost from the data, including Pulte Homes, which rose 8.4 percent to $8.79, while D.R. Horton gained 4.5 percent to $5.36.
Among energy shares, Chevron lost 6.8 percent to $62.23 while Exxon Mobil gave up 3.9 percent to $67.60.
Before the market opened, stock futures had fallen so steeply they had to be frozen after triggering a limit down. Losses at the open were not as severe as investors had feared, and by midday, stocks had come off their lows.
"Amazingly enough, we're not down more than this," said David Henderson, NYSE floor member and president of Raven Securities Corp, on the exchange floor.
"The market is showing some signs that there are value buyers out there."
Fueling global economic concerns, data showed the British economy shrank 0.5 percent in the third quarter, the first contraction in 16 years and substantially more than expected.
"All evidence would tell you we are in a recession and have been in a recession," said Dunigan. "If anyone's waiting for someone to officially declare it, it'll be over by then."
Shares of National City Corp slid 25.1 percent to $2.06 after PNC Financial Services Group Inc said it would buy the ailing Cleveland-based bank for $5.6 billion.
PNC pushed against the current, gaining 3.6 percent to $58.88.
(Additional reporting by Jonathan Spicer; Editing by Jan Paschal)
