U.S. Stock Markets Fall 2% On Recession Worries

The Dow Jones Industrial Average fell 277.04 points closing at 12501.11 and Nasdaq fell 241.59 points closing at 2417.59.

The Standard & Poor's 500 Index .SPX was down 35.49 points, or 2.51 percent, at 1,380.76. The Nasdaq Composite Index .IXIC was down 60.71 points, or 2.45 percent, at 2,417.59.

Possible recession, Intel's report and Citigroup's record loss have contributed greatly to market's downfall. This situation naturally made investors to find sanctuary in government bonds, which in turn rallied treasuries.

People at Wall Street would like the Fed to cut interest rates, but some argue that the Federal reserve and Bernanke should cut the rates as they see it necessary not what the Wall Street wants to what they tell Fed to do.

A.G. Edwards Chief Market Strategist Al Goldman commented earlier on the markets writing "December retail sales dropped 0.4%. Analysts had been looking for no change. After the report, the price of oil fell by more than two dollars a barrel and the dollar fell to its lowest since June 2005 against the Japanese yen. The data created talk on Wall Street that the Fed might announce an interest rate cut to revive the economy before its next meeting, scheduled in two weeks. A survey of New York state factory activity released this morning was also below forecasts. The December core producer price index, excluding food and energy, rose 0.2%, in line with expectations.

It was a painful day for investors. Stock averages plunged, more than wiping out Monday's gains. Weak earnings and a grim report on retail sales alarmed the market and stirred concerns about a possible recession. Citigroup posted the biggest quarterly loss in its history and cut its dividend by 40%. The bank also wrote off $18 billion for mortgage defaults. The shares fell 2.12 to 26.94.

The Commerce Department reported retail sales declined in December for the first time in six months. This led to talk that the Fed may cut interest rates to jump-start the economy, even before its next scheduled meeting in two weeks.

Crude oil fell more than two dollars a barrel on concerns a slowing economy would curb demand. Boeing shares finished down 3.81 at 77.86 following a report of delays in the delivery of the company's 787 Dreamliner.

The Dow finished down 277.04 at 12,501.11. NYSE volume totaled over 1.8 billion shares. The S&P 500 fell 35.30 points. The Nasdaq lost 60.7 points. Declining issues beat advancers by about 3-1 on both the NYSE and the Nasdaq. The 10-year Treasury note was up 20/32 to yield 3.69%."

Some analysts say that the real problem may be the confusion and that the government is detached from the markets. The Commerce Department reported December retail sales fell 0.4%, the first such decline in six months and a performance worse than analysts had projected, which in turn underscored investors' fears a about the retail sector and the possible economic recession.