- The Washington Times - Monday, December 1, 2008


Wall Street got walloped with a double whammy today as investors nervous about the holiday shopping season were hit with two economic reports whose figures were lower than expected.

At the same time, the National Bureau of Economic research, a panel of economists that designates business cycles, said the U.S. economy has been in recession since December 2007. Economic activity peaked then.

U.S. manufacturing fell to its lowest point in 26 years in November as new orders dropped for the 12 consecutive months, the Institute for Supply Management said.

Its monthly index of manufacturing activity fell to 36.2 from October’s 38.9. Wall Street had expected 38.4. A number below 50 indicates that the sector is contracting.

The reading marked the lowest since May 1982.

The Commerce Department reported that construction spending dropped by a larger-than-expected amount in October, a further indication that builders are facing deepening problems in the construction of homes, hotels and other projects.

Spending fell by 1.2 percent in October, much more than the 0.9 percent decline that many analysts had expected.

Investors couldn’t help but recognize the shortfalls, and the markets got a thumping.

By midday, the Dow Jones Industrial average tumbled 449.85, or 5.10 percent, to 8379.19. The tech-heavy Nasdaq was off 6.8 percent, or 94.86 to 1440.71, and the broader Standard & Poor’s 500 dropped 54,43, or 6.07 percent, to 841.81.

Things didn’t begin well for the markets.

Investors were wary about the holiday shopping season that opened Friday, even though preliminary figures released by RCT Shopper Track, which tracks total retail sales at more than 500,000 outlets, showed that sales rose 3 percent to $10.6 billion on Black Friday. Data on combined shopping sales for Friday and Saturday are to be released later today.

The Asian and European markets were off before the New York exchanges opened.



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