Recession Dread Brings On Another Wall Street Plunge

By: Anthony Pascale

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Investors on Wall Street were hit hard by global economic fears Thursday as stocks tumbled, ending a four-day stretch in relatively stable trading.

Asian markets reacted early Friday with another drop, striking another blow to global financial confidence.

At the closing bell Thursday, the Dow Jones Industrial Average had lost 419 points.

The Nasdaq was also down 131 points and the S&P 500 lost 53.

Brokers were dealt a nasty blow right from the start as the Dow lost more than 300 points in the first minutes of trading.

Financial analysts said unemployment worries and rising inflation are part of what dragged the market down.

Weekly jobless claims also rose by 9,000 to 408,000 -- a number that was higher than expected.

The prior week it fell below 400,000 for the first time in months.

Additionally, consumer prices rose half a percent last month -- more than double what economists predicted.

The jump in the cost of living is being driven largely by the cost of food and fuel, meaning households are paying more for the things they need.

Also adding to the drop was a warning by Morgan Stanley that both the United States and Europe are dangerously close to a recession.

They said Europe's slow response to its sovereign debt crisis and the debt ceiling debate at home continue to damage the markets and consumer confidence.

The bank also slashed its own forecast for global growth.

As many New Yorkers grappled with what to do with their money, some said they are not taking chances, while others remained somewhat optimistic.

"As an investor I'm all in cash I wouldn't put my money in the market until things stabilize,' said one New Yorker.

"Well I think it means that I look very closely at my retirement plans and my future and my hope is that well be able to turn things around," said another.

"It's hard but everything is hard but it'll come back but I have faith it'll come back," said a third.

Money continued to flow out of stocks and into safer investments such as gold, which rose to a record high. Treasury yields also dropped with increased demand for U.S. debt.