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NEW YORK - UNITED States stock markets tumbled on Thursday as lacklustre economic news renewed fears that the world's largest economy is sliding into recession.
Stocks fell after a report showed a decline in a key economic gauge and as a separate snapshot, compiled by the Federal Reserve Bank of Philadelphia, revealed that regional manufacturing activity continued to weaken.
The Dow Jones Industrial Average closed down a hefty 142.96 points, or 1.15 per cent, at 12,284.30.
The Nasdaq composite slumped 27.32 points, or 1.17 per cent, to 2,299.78 while the Standard & Poor's 500 index finished down 17.50 points, or 1.29 per cent, at 1,342.53.
Traders said the day's economic news had weighed heavily on market optimism.
Economists at Global Insight said in a briefing note that 'the US economy is in the early stages of a mild and short recession'.
Wall Street has been battered in recent months by a worsening housing slump and credit woes afflicting major financial firms that have lost billions of dollars in soured mortgage-related investments.
The Conference Board, a private research group, said Thursday that its index of Leading Economic Indicators fell 0.1 per cent in January.
'The change in the Leading Index, including the duration, intensity, and dispersion across markets, suggests weak growth going forward,' said Mr Ken Goldstein, a labour economist at the Conference Board.
The research group cited tumbling stock prices and declining demand for home-building permits as the main reasons for the index's latest drop.
Separately, the Federal Reserve Bank of Philadelphia released a downbeat snapshot on regional manufacturing which also weighed on Wall Street.
'Activity in the region's manufacturing sector continued to weaken this month,' the bank said.
The reports suggested wider economic momentum remains under pressure after gross domestic product (GDP) growth slowed markedly during the fourth quarter of 2007 to an annualised 0.6 per cent.
'Is the economy in recession? More and more data point to that,' observed Mr Joel Naroff, the president of Naroff Economic Advisors.
Market participants said the sluggish economic readings would likely spur the Federal Reserve to cut borrowing costs at a policy meeting next month. The Fed has slashed borrowing costs since September in a bid to underpin economic momentum.
Many economy-watchers expect the central bank to unleash a rate cut of 50 basis points at a March 18 policy meeting. The Fed has cut its key short-term federal funds rate by 225 basis points to 3.00 per cent since September. -- AFP
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