US stocks plunge on recession fears, weak US data

US stocks tumbled on Wednesday amid weak US economic data, with the Dow industrials dipping below 9,000 points amid increasign recession fears.

The blue-chip Dow Jones Industrial Average fell as low as 8,978.78 before a slight comeback. At 1425 GMT, the index was down 317.95 points (3.41 percent) at 8,993.04.

The Nasdaq lost 40.24 points (2.26 percent) to 1,738.77 and the broad Standard & Poor's 500 index retreated 37.53 points (3.76 percent) to 960.48.

Market action came on news that US retail sales slumped 1.2 percent in September, a sign of deeper troubles for an economy ailing from a financial market firestorm and tight credit.

The drop in sales was the steepest since August 2005 and weaker than market expectations for a 0.7 percent decline.

Investors also digested third-quarter earnings from two banks caught up in the mortgage mess. JPMorgan Chase & Co. reported an 84 percent decline in its third-quarter profit, offering further evidence of how the financial crisis is slamming the economy.

JPMorgan, which bought the assets of failed bank Washington Mutual Inc. late last month as a result of the mortgage bust, said the profit drop reflected losses on bad mortgage investments, leveraged loans and home loans. Still, the results beat expectations.

Also Wednesday, Wells Fargo & Co. reported that its third-quarter profits fell 23 percent after it took hits on investments in troubled finance companies and increased its credit reserves. The gain topped expectations.

Source: EconomicTimes