Stocks sink on economic worry, Citi job cuts

NEW YORK (Reuters) – Stocks slid on Monday after Citigroup Inc. (C.N) said it planned more than 50,000 job cuts and Japan, the world's second-largest economy, slid into recession, adding to a bleaker global economic and profit outlook.

Shares of Citigroup, a Dow component, fell 5 percent, and the S&P financial index (.GSPF) shed 4 percent. Investors also sold off technology, one of the sectors seen as vulnerable to a global downturn and reduced business spending.

According to a survey of professional forecasters by the Philadelphia Federal Reserve Bank the United States, the U.S. economy entered recession in April that will last for 14 months.

"The market has correctly forecast the recession that we are in," Ernie Ankrim, chief investment strategist for Russell Investment Group in Tacoma, Washington, said. "The news of job cuts is one more indication that the economy is in a very difficult shape right now."

The Dow Jones industrial average (.DJI) slid 217.44 points, or 2.56 percent, to 8,279.87. The Standard & Poor's 500 Index (.SPX) tumbled 21.31 points, or 2.44 percent, to 851.98. The Nasdaq Composite Index (.IXIC) plunged 31.22 points, or 2.06 percent, to 1,485.63.

Microsoft (MSFT.O) shares fell about 3 percent, making the stock a top drag on Nasdaq. Shares of Apple Inc (AAPL.O) fell nearly 2 percent.

The news from Japan marked another big blow to investors' sentiment, along with the failure of this weekend's meeting of the world's 20 largest economies to come up with new stimulus measures for the world economy.

Citigroup shares dropped to $9.02 on the New York Stock Exchange, as shares of Microsoft dropped to $19.43 on Nasdaq.

Apple shares fell to $99.92.

News of Japan sliding into its first recession in seven years in the third quarter followed last week's news that the Euro zone had also entered recession.

Monday's economic reports included data that showed a key manufacturing gauge in New York state tumbled in November to yet another record low.

Wachovia Capital Markets cut its 2009 operating earnings estimate on the Standard and Poor's 500 Index (.SPX) to $78.30 per share from $86 per share, citing deterioration in global growth prospects.