Wall Street plummets as data feeds recession worry

NEW YORK - Wall Street had its worst day since the 1987 stock market crash on Wednesday, as bleak economic data fed worries that all the efforts to unlock credit markets may not stave off a severe recession.

Federal Reserve Chairman Ben Bernanke added to those concerns when he said the economy faced a 'significant threat' from paralysed credit markets.

Dismal monthly US retail sales set the tone for the session, dropping the most in more than three years, while a measure of New York state manufacturing hit its lowest level since the index started in 2001.

The Nasdaq has now wiped out all of its gains from Monday's 11 per cent rally, while the benchmark S&P 500 is up only about 1 per cent from Friday's close.

Wednesday's data intensified recession fears, as did the Federal Reserve's Beige Book report, which showed economic activity weakened across the United States in September as businesses revised capital investments and consumers curtailed spending.

Shares of companies considered economic bellwethers, such as industrial conglomerate Caterpillar Inc, fell sharply. Caterpillar's shares slid over 11 per cent.

Fears of recession knocked commodities lower, with Exxon Mobil tumbling 14 per cent as the price of oil fell.

The Dow and the benchmark S&P 500 suffered their worst one-day percentage drops since 1987.

The Dow Jones industrial average slid 733.08 points, or 7.87 per cent, to 8,577.91, while the Standard & Poor's 500 Index tumbled 90.17 points, or 9.03 per cent, to 907.84.

The Nasdaq Composite Index sank 150.68 points, or 8.47 per cent, to 1,628.33.

Source: Singapore Business Times - 16 Oct 2008