US stocks plunge anew as recession worries resurface

Source: Agencies  |   2008-11-6  |     ONLINE EDITION

A CASE of postelection nerves sent Wall Street plunging yesterday as investors absorbed a stream of bad economic news abd wondered how a Barack Obama presidency will help the country weather a possibly severe recession. Volatility returned to the market, with the Dow Jones industrials falling nearly 500 points and all the major indexes tumbling more than 5 percent.

The market was expected to give back some gains after a six-day runup that lifted the Standard & Poor's 500 index more than 18 percent. But investors lost their recent confidence about the economy and began dumping stocks again light volume helped exaggerate the price swings.

"The market has really gotten ahead of itself, and falsely priced in that this recession wasn't going to be as prolonged as thought," said Ryan Larson, head of equity trading at Voyageur Asset Management, a subsidiary of RBC Dain Rauscher.

"We're in a really bad recession, period," he said. "Wall Street can spin it anyway they want to, but this is likely going to be more prolonged than people anticipated. People are locking in profits and realizing we're not out of the woods."

Beyond broad economic concerns, worries about the financial sector intensified after Goldman Sachs Group Inc. began to notify about 3,200 employees globally that they have been lost their jobs as part of a broader plan to slash 10 percent of the investment bank's work force, a person familiar with the situation said. The cuts were first reported last month. Goldman fell 8 percent, while other financial names also fell Citigroup Inc dropped 14 percent.

Commodities stocks also fell after steelmaker ArcelorMittal said it would slash production because of weakening demand. Its stock plunged 21.5 percent.