Updated from 1:38 p.m. EST

Stocks in New York were suffering a merciless beatdown Monday, as the Bureau of Economic Research confirmed what many had suspected -- the U.S. has been in a recession for nearly a year.

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.


Dow Jones Industrial Average

was recently down 404 points to 8425, and the

S&P 500

fell 50 points to 846. The


was lower by 86 at 1449.

Other economic data released Monday were also bearish. The Census Bureau's October construction spending figures showed a 1.2% decline compared with flat spending for September.

The Institute for Supply Management's November

manufacturing index

registered at 36.2, a 26-year low. Economists were expecting a reading of 37.

"However you look at the numbers the message is the same; manufacturing is in freefall, with output collapsing. We see no prospect for near-term improvement," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. He said the survey is an indication that the recession will continue.

Speaking in Austin, Texas,

Federal Reserve Chairman Ben Bernanke

discussed the economic environment, leaving the option for an additional reduction in the fed funds rate on the table. The Fed's target interest rate currently rests at 1%.

Beyond the dim economic reports, investors had other incentives to sell. Monday's session offered occasion for investors to close the book on November, which was filled with wild market swings, including a five-day surge in the Dow and S&P that closed out the month.

"We've had a lot of very extreme and in some cases bizarre market movements," said Brian Gendreau, investment strategist at ING Investment Management. He said that much of the volatility has been due to hedge-fund redemptions. That process may be anywhere between half to three-quarters done, he said.

Gendreau said he had been hoping for a bounce in the major averages that follows a major selloff and additional support from the end of the presidential race. "Maybe we got it, but maybe that was it," he said of November's month-end rally.

Corporate headlines did little to counter selling pressure. Before trading began, beleaguered automaker

General Motors

(GM) - Get Report

was ironing out a plan to cajole Congress into giving it federal money, according to a report by

The Wall Street Journal

. The report indicated that GM's board is willing to explore all restructuring options, including a Chapter 11 bankruptcy filing, if it can't secure government funds.

Over the weekend, another report by the


said that GM was exploring other plans to shore up its balance sheet, including offering its debt holders the opportunity to swap credit for equity.

As the carmakers faced dire circumstances, the

United Auto Workers

called for Congressional aid for the Big Three.

Fellow automaker


(F) - Get Report

said it was considering a possible sale of its Volvo brand. The move comes amid a decline in global auto demand and Ford's efforts to bolster its balance sheet, the company said.

Hoping to reach a bailout deal, the automakers are expected to present before Congress on Tuesday plans for revamped business models and improved long-term viability.



also reported that

Delta Air Lines

(DAL) - Get Report

would scale back its orders for


(BA) - Get Report

new 787 Dreamliner and instead add to its orders for the long-range 777-200LR.

In the financial sector,


(C) - Get Report

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.


Morgan Stanley

(MS) - Get Report

may buy regional banks to expand its retail banking footprint after becoming a bank holding company in September, according to a




(AIG) - Get Report

announced it was selling its Switzerland-based AIG Private Bank wealth management business to Abu Dhabi firm

Aabar Investments

Beyond the financial sector,

Johnson & Johnson

(JNJ) - Get Report

, meanwhile, said it would buy breast-implant maker



for $1.07 billion.

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) - Get Report

, which filed for Chapter 11 bankruptcy protection Monday.

As to

analyst actions



(OXY) - Get Report

garnered an equal-weight rating at Morgan Stanley. Insurer


(PRU) - Get Report

was upgraded to buy from hold at Citigroup on valuation.


(MSFT) - Get Report

, meanwhile, suffered a reduced price target at Morgan Stanley.

In the realm of commodities, crude oil for January delivery lost $5.15 to settle at $49.28 a barrel. On Saturday,


said it will forgo new reductions in output but did not rule out a supply cutback going forward.

Longer-dated U.S. Treasury securities were rising in price. The 10-year note was gaining 1-26/32 to yield 2.72%, and the 30-year was up 4-5/32, yielding 3.24%. The dollar was rising vs. the euro and pound but falling against the yen.

Overseas, European exchanges such as the FTSE in London and the DAX in Frankfurt were trading lower. In


, Japan's Nikkei closed with losses, while Hong Kong's Hang Seng ended on the upside.