At the opening the Dow Jones industrial average fell 0.4 percent. The Nasdaq composite index skidded 1.1 percent. The Standard & Poor's 500 index was 0.4 percent lower.

Opening comments by A.G. Edwards Chief Market Strategist Al Goldman

The stock market started badly yesterday and it got worse throughout the session as stocks were pressured by more evidence that the risk of a recession is rising. December retail sales declined (-0.4% v. estimate +0.0%) and ex-autos also fell (-0.4% v. estimate -0.1%), which shows serious deterioration in consumer confidence. On the inflation front, while the headline December PPI figure was below estimates (-0.1% v. predicted +0.2%) and ex-food & energy was in line with expectations of +0.2%, what captured the headlines was the year-over-year rise of +6.3%, the largest rise since 1981. Adding to the market's woes, the largest bank in the country, Citigroup (26.94, C), announced its biggest quarterly loss ever and slashed its dividend by 41%.

Former Fed Chairman Greenspan disclosed in a WSJ interview that while recessions don't happen smoothly, the symptoms are clearly there and "the U.S. economy is probably in or about to enter a recession." Energy stocks led the decline after the price of crude oil fell $2.03 per barrel. Financials and technology stocks followed close behind on the downside.

There was an attempt at a rally in the last hour of the session. It lasted about 30 minutes and the DJIA lifted 110 points, but the recovered ground was lost and the major averages all finished near their lows of the day and just above or at their 2008 intraday lows. The NYSE A/D was 3/1 negative issues and 93% of the volume was to the downside. The NASDAQ A/D was greater than 3/1 negative and 90% of the volume was to the downside.

Volume was heavier than Monday's pace in the Dow's 171-point rally, but activity still has not reached levels that signal capitulation selling. The dominant trend remains down and investors' mood is very gloomy. There will be oversold bounces along the way, but traders should remain defensively positioned as the recession-discounting process is likely to take some time to play itself out. Also, investors will have to discount the probability that if we are in a recession, corporate earnings will likely decline. The bottom of our seven-month trading range, the S&P 500 level of 1370, should produce a bounce, but the trends in place say that it will be broken over the near term.

Today - Stock futures were initially pressured after Intel (22.69 INTC) posted 4Q results and a 1Q outlook that fell short of Wall Street targets. In morning economic news, December CPI figures were in line with expectations, but stock futures slid further and are signaling a heavy opening as investors focused on the year-over-year rise of +4.1%, the biggest calendar-year increase since 1990.