Stocks Sink Following Official Recession Announcement

All of AdMarket 50 Tumbles; Sprint, American Express Show Biggest Losses

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LOS ANGELES ( -- As the economy was officially declared in recession today, the broad Dow Jones Wilshire 5000 tumbled 9.1% and the Dow Jones Industrial Average dropped 7.7% -- 680 points -- to 8,149. The market in one day gave back more than half of the gains it had made since hitting bottom Nov. 20.

The market had risen for all five consecutive trading days since Nov. 21, breathing easier as President-elect Barack Obama announced his economic team and plan. But stocks sank today on growing worries of a prolonged global recession. Manufacturing reports in the U.S., U.K. and China suggested weakening demand. The National Bureau of Economic Research today also confirmed the obvious: The nation is officially in recession -- and, in fact, has been since last December.

The Ad Age/Bloomberg AdMarket 50 dropped 7.1%. All 50 AdMarket stocks -- marketers, media, agencies -- fell. Those stocks, though, are all still above their 52-week lows; most hit their bear-market lows in November.

Marketers of consumer staples -- Procter & Gamble Co., Kraft Foods, Coca-Cola Co., PepsiCo -- took a hit, suggesting investor fears that even sellers of package goods and food could face troubles in a slowdown.

Best and worst
The worst performers: ailing Sprint Nextel (down 24.4%); American Express Co. (down 15.7% in a weak financial sector); and coupon firm Valassis Communications (down 15.5%).

The best performers still showed big losses: McDonald's Corp. (down 4.4%); newspaper publisher McClatchy Co.; and retail leader Wal-Mart Stores (both down 5.1%).

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