Stocks Pummeled On Weak Manufacturing Data, Recession

Stocks were pummeled today on a trio of negative data, which included reports showing depressed manufacturing levels in the U.S. and China and a report that confirmed that the U.S is officially in a recession. The Dow fell 680 points or 7.7%, the Nasdaq sank 138 points or 9%, and the S&P 500 fell 80 points or 9%. Today's decline erased a big chunk of last week's gain, which was the largest over a 5-day period since 1933.

In the U.S., the ISM manufacturing index fell to 36.2, the lowest level since 1982. A reading below 50 shows contraction. In China, manufacturing shrank by the most on record.

Today, the National Bureau of Economic Research said that we are officially in recession. The committee determined that a peak in economic activity occurred in the U.S. economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months.

Financials were one of the hardest hit groups today following another negative report from outspoken Oppenheimer banking analyst Meredith Whitney, who said consumer credit is the next shoe to drop. She said trillions in consumer credit liquidity could be pulled. The main ETF tracking the industry, Financial Select Sector SPDR (AMEX: XLF), fell nearly 17% today. In addition, investment banks, Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS), had EPS estimates cut again at a number of firms. Shares of GS and MS fell 17% and 23%, respectively.

Shares of General Electric (NYSE: GE) fell 10% after an analyst at Citigroup said the company could lower guidance at tomorrow's webcast on GE Capital.

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