Dow Drops 733 Points on Fears of Recession...."All Signs Point to Yes"

The great "Magic 8 Ball" says "All signs point to YES" ~ "Recession is Likely!"

It all began in the morning when the Commerce Department reported that consumer sales dropped 1.2%, (almost double the expected .7%). This news sparked a sell-off.

In the afternoon, the Federal Reserve's Beige Book presented more bad news on the slowing economy. "Reports indicated that economic activity weakened in September across all twelve Federal Reserve Districts. Several Districts also noted that their contacts had become more pessimistic about the economic outlook."

If that wasn't bad enough, in a speech given to the Economic Club of New York, Federal Reserve Chairman, Dr. Ben Bernanke, said, "Stabilization of the financial markets is a critical first step, but even if they stabilize as we hope they will, broader economic recovery will not happen right away. Economic activity had been decelerating even before the recent intensification of the crisis. The housing market continues to be a primary source of weakness in the real economy as well as in the financial markets, and we have seen marked slowdowns in consumer spending, business investment, and the labor market. Credit markets will take some time to unfreeze. And with the economies of our trading partners slowing, our export sales, which have been a source of strength, very probably will slow as well."

With that triple-whammy of bad news spurring sales in the morning and driving them to accelerate up until the final hours of trading, The Dow Jones industrials ended down 733.08, or 7.87 percent, at 8,577.91.

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