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United States stocks plunged on the first trading day of 2008 yesterday after oil hit US$100 ($129) a barrel and US manufacturing data showed signs of contraction, raising fears the economy may be heading into recession.
Economically sensitive shares were among the top casualties on the Dow, which fell more than 200 points, as the Institute for Supply Management reported December US factory activity contracted.
Heavy equipment maker Caterpillar was down 2.9 per cent at US$70.45, and diversified manufacturer Honeywell International fell 2.7 per cent to US$59.93.
"The ISM [manufacturing] report created most of the initial damage ... but the second hundred-point down on the Dow had to do with oil rushing to US$100," said Jim Paulsen of Wells Capital Management, Minneapolis.
"The combination is much more devastating than any single report. The tone of the newspapers tomorrow will be about recession."
Further weighing down the market, Banc of America cut its rating on eight semiconductor stocks, including No 1 chip-maker Intel, sending the sector down sharply. Intel was the top drag on the S&P 500.
The Dow Jones industrial average was down 233.70 points, or 1.76 per cent, at 13,031.12. The Standard & Poor's 500 Index was down 22.25 points, or 1.52 per cent, at 1446.11. The Nasdaq Composite Index was down 48.93 points, or 1.84 per cent, at 2603.35.
The Institute for Supply Management's manufacturing survey showed factory activity fell in December to 47.7, its weakest level since April 2003.
A reading below 50 points indicates contraction.
- Reuters
