Updated from 4:08 p.m. EST
Stuck in losing territory for much of Wednesday's trading, U.S. stocks took a late-day plunge to settle with massive losses, as record-setting declines in housing and consumer prices wreaked havoc on the major averages.
Dow Jones Industrial Average
sank 427.47 points, or 5.1%, to 7997.28, and the
fell 52.54 points, or 6.1%, to 806.58. The
tumbled 96.85 points, or 6.5%, to 1386.42. All 30 of the Dow's component stocks finished with losses as the index closed below the 8000 mark for the first time in more than five years.
Investors sold furiously, showing little faith in U.S. companies' ability to weather a worsening economic climate. Several data releases gave credence to traders' trepidation. The Census Bureau said that
declined 4.5% to an annual rate of 791,000 for October, the largest one-month decline on government records dating back to 1959.
"Lowest of all time kind of speaks for itself," said Mike Feroli, U.S. economist for JPMorgan Economics. "If you're looking for a silver lining, the pain now hopefully puts you in a place to clear out inventories down the line." But in exchange for cleared inventories, the U.S. will suffer declines in construction employment and slower growth, he said.
Separately, the Bureau of Labor Statistics reported that its
consumer price index
fell 1% for October thanks in part to falling energy prices. The CPI's decline was its largest on record. Economists were expecting a decline of 0.8%. The core rate dropped 0.1%, following a 0.1% uptick in September.
Even accounting for the index's volatile components, said Feroli, the decline in prices appears to be broad-based. He said that although the decline in consumer prices may not be this sharp every month, he expects prices to continue to flag going forward.