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Stocks Fall Amid Fears Of Recession

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The Associated Press

Published: October 25, 2008

NEW YORK - Wall Street joined stock markets around the world in a huge sell-off Friday, sending major market indexes to their lowest levels in more than five years on the belief that a punishing economic recession is at hand. A grim outlook from electronics maker Sony helped trigger the selling, and another bleak forecast from the automaker Daimler added momentum to the drop.

U.S. trading was dramatic and fractious, with the Dow Jones industrials falling more than 500 points soon after the opening bell. The blue chips followed the pattern of recent sessions, recovering ground only to fall sharply again before ending the day with a loss of 312 points. All the major indexes fell more than 3 percent.

The pullback on Wall Street, while steep, wasn't as bad as some observers had feared after stocks plunged overseas in response to another round of grim corporate news. Sony's profit warning sent its shares tumbling in Japan and offered only the latest example that companies are girding for a slowing economy and a pullback among consumers worried about falling home prices and losses on their investments.

And in Germany, Daimler's stock fell sharply after the company reported lower third-quarter earnings and abandoned its 2008 profit and revenue forecast. That followed news in the United States late Thursday from Microsoft Corp., which issued a weaker-than-expected forecast for its fiscal second quarter, pointing to the economy; other big U.S. companies have scaled back their forecasts as they announced third-quarter earnings.

"People have been saying that we're in a recession. This is the realization," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York.

It is clear that many investors are convinced the world economy is headed for a severe downturn even as governments have raced to revive credit markets on the hope that a return of more normal lending levels by banks and other financial houses will fan economic activity.

By the close, the Dow fell 312.30, or 3.59 percent, to 8,378.95 after falling 504 points in the early going. Broader stock indicators also fell Friday. The S&P 500 index declined 31.34, or 3.45 percent, to 876.77, and the Nasdaq composite index fell 51.88, or 3.23 percent, to 1,552.03.

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