Dow Dives 680 as Wall Street Learns It's Really a Recession

Updated from 4:08 p.m. EST

Stocks in New York suffered a merciless beatdown and closed with brutal losses Monday, as the National Bureau of Economic Research confirmed what many had suspected -- the U.S. has been in a recession for nearly a year. Monday's session was also marked by massive profit-taking after a five-day rally in the blue-chip indices, and without significant buying catalysts, stocks succumbed to selling pressure.

The Dow Jones Industrial Average plummeted 679.95 points, or 7.7%, to 8149.09, and the S&P 500 fell 80.03 points, or 8.9%, to 816.21. The Nasdaq sank 137.50, or 9%, to 1398.07.

All of the Dow's 30 stocks finished with losses, and its best performer, McDonald's (MCD Quote), lost 4.4%. Of the S&P 500's components, only two stocks -- Rohm & Haas (ROH Quote) and AutoNation (AN Quote) -- finished on the upside.

The NBER, which tasks itself with declaring the timing of business cycles, said the U.S. entered a recession in December 2007.

"That's good news in some ways," said Hugh Johnson, chief investment officer at Johnson Illington Advisors. "Nobody's going to think so, but I think so." The reason for Johnson's optimism, he said, is that the average recession lasts between 16 and 17 months. If the current downturn started nearly a year ago, then the economy should soon approach a recovery, he said.

However, Johnson said, there are many indications that the current recession will be longer than average. He said that gloomy leading indicators, along with a dim outlook for the housing market, point to a prolonged downturn. "The problem is, I can't make the case for the end," he said.