A growing conviction that the U.S. is headed toward recession sent Wall Street plunging Tuesday, with weak retail-sales figures and disappointing...
NEW YORK — A growing conviction that the U.S. is headed toward recession sent Wall Street plunging Tuesday, with weak retail-sales figures and disappointing results from Citigroup exacerbating investors’ pessimistic mood.
The Dow Jones industrials fell 277.04, or 2.2 percent, to 12,501.11.
Microsoft, one of the 30 Dow stocks, slipped 39 cents to close at $34. Boeing, also a Dow stock, plummeted $3.81, or 4.7 percent, to $77.86 on a report of new 787 delays.
Broader stock indicators also lost ground. The Standard & Poor’s 500 index dropped 35.30, or 2.5 percent, to 1,380.95, and the Nasadaq composite index lost 60.71, or 2.4 percent, closing at 2,417.59.
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Investors backed away from stocks amid growing concerns that consumer spending will wane and contribute to an economic downturn.
The latest evidence that consumers are retrenching came from the Commerce Department, which said retail sales fell last month while it also revised its November figures lower. Spending by consumers, which accounts for more than two-thirds of U.S. economic activity, has been key to staving off economic slowdowns in recent years.
There is also a growing fear that the Federal Reserve hasn’t done enough to keep the economy going — especially as investors continue to see the fallout from the summer’s subprime-mortgage crisis. Citigroup, the nation’s biggest bank, announced Tuesday a hefty $18.1 billion write-down for bad mortgage assets and slashed its dividend.
Brian Gendreau, investment strategist for ING Investment Management, said the market is now seeing “a decisive shift” toward a recession.
“The sectors that are outperforming are defensive plays, like consumer staples,” he said. “People don’t buy them unless you’re worried about sustained weakness.”
Tuesday’s trading more than wiped out Monday’s triple-digit gain in the Dow, and showed the depths of the market’s pessimism. Both the Dow and S&P 500 are almost 12 percent below their October highs, while the S&P 500 is off nearly 15 percent from its high in November.
A 10 percent drop from a market high is considered a correction.