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

In the financial sector, Citigroup (C Quote) bought a highway business from Spanish construction firm Sacyr Vallehermoso for $10 billion. Media reports also suggested Citi would sell its Japanese trust banking unit for $416.7 million. Citi, a Dow component, was the index's biggest loser, dropping 22% to $6.45.

Meanwhile, Morgan Stanley (MS Quote) may buy regional banks to expand its retail banking footprint after becoming a bank holding company in September, according to a Journal report. Shares sank 23% to $11.35.

AIG (AIG Quote) announced it was selling its Switzerland-based AIG Private Bank wealth management business to Abu Dhabi firm Aabar Investments. AIG lost 18% to $1.65.

Beyond the financial sector, Johnson & Johnson (JNJ Quote), said it would buy breast-implant maker Mentor (MNT Quote) for $1.07 billion. The stock edged down 5.6% to $55.33. Mentor soared 89% to $30.58.

Gendreau of ING said M&A activity had fallen off as capital and credit, which had supported deal brokering, became increasingly scarce this year. On the other hand, "With all of these extreme market movements, there have to be some mispricings."

Elsewhere, the caustic economic climate claimed chicken processor Pilgrim's Pride (PPC Quote), which filed for Chapter 11 bankruptcy protection Monday.

As to analyst actions, Occidental (OXY Quote) garnered an equal-weight rating at Morgan Stanley. Insurer Prudential (PRU Quote) was upgraded to buy from hold at Citigroup on valuation. Occidental dropped 15% to $45.89, and Prudential skidded 21% to $17.15.

Microsoft (MSFT Quote), meanwhile, suffered a reduced price target at Morgan Stanley. Shares dropped 8% to $18.61.