New York - US stocks plunged by the most in more than a month Monday, erasing about half of last week's rally amid fears of a widening economic slowdown. Industry figures showed that the US manufacturing sector fell to its lowest level since 1982. The Institute for Supply Management's index fell to 36.2 in October. A reading below 50 marks a contraction.
General Electric Co and Caterpillar Inc both lost nearly 10 per cent on the news.
The new indicators came as the world's largest economy was officially declared in a recession. The National Bureau of Economic Research, a group of top US economists considered the arbiters of economic activity, said a recession has been underway since December 2007.
Federal Reserve Chairman Ben Bernanke said a further cut in US interest rates was "certainly feasible" given the economic slowdown. The federal funds rate has already been slashed to 1 per cent.
The blue-chip Dow Jones Industrial Average fell 679.95 points, or 7.7 per cent, to 8,149.09. The Standard & Poor's 500 tumbled 80.93 points, or 8.9 per cent, to 816.21. The technology-heavy Nasdaq Composite Index 137.50 points, or 8.95 per cent, to 1,398.07.
Financial stocks led the decline, falling 17 per cent in the S&P. The drops erased much of the gains made last week, when the S&P rallied five straight days to post its biggest advance over a five- day period since 1933.
The US currency rose to 79.26 euro cents from 78.79 euro cents on Friday. The dollar fell against the Japanese currency to 93.15 yen from 95.53 yen on Friday.
