Stock sell-off erases half of rally's gains

  • Article by: Associated Press
  • Updated: December 1, 2008 - 8:42 PM

Last week's winning streak slammed into reverse, with the Dow suffering its fourth-largest single-day loss.

NEW YORK - The stock market suffered one of its worst days since the financial meltdown Monday, slicing 680 points off the Dow Jones industrial average as Wall Street snapped out of its daydream of a rally and once again faced the harsh reality of a recession.

Not only did stocks end their five-day winning streak, they erased more than half the gains. The Standard & Poor's 500 stock index, one of the broadest market gauges, lost nearly 9 percent.

Ending any lingering doubts, there finally was an officially declared recession -- in progress in the United States since December 2007, according to the National Bureau of Economic Research, the nonprofit group of economists that classifies business cycles.

"This is just another episode in a long story, and the story is all about recession, and the question is how long and how deep," said Chuck Widger, chief executive and chairman of investment management firm Brinker Capital. "We're going to have continuing volatility until investors have better visibility."

"All the data is being filtered to answer the two questions of how deep and how long the recession will be," he added.

Selling was broad and deep. All 30 of the stocks in the Dow Jones industrial average finished lower. On the New York Stock Exchange, more than 7 stocks fell for every one that rose.

The Dow lost 679.95 points to close at about 8,149. Only three days in market history have had bigger point losses for the Dow -- the Monday after the Sept. 11 attacks, and Sept. 29 and Oct. 15 of this year.

Bond prices jumped as investors sought the safety of government debt. The yield on the three-month Treasury bill, considered one of the safest investments, slipped to 0.03 percent.

ASSOCIATED PRESS

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