U.S. Stocks Drop as Recession Fears Build

Updated from 9:38 a.m. EDT

U.S. stocks opened to the downside Monday as traders continued to worry about the extent and duration of a potential global recession.

The Dow Jones Industrial Average was losing 144 points to 8235, and the S&P 500 was off 17 points at 859. The Nasdaq was lower by 26 points at 1526.

On Friday, stocks closed on the downside as funds continued a forced liquidation of their investments and traders grappled with growing fears of a worldwide economic downturn.

As Monday's session began, financial firms, major players in the global crisis, were in focus. The Financial Times Web site reported that Goldman Sachs ( GS) chief Lloyd Blankfein approached Citigroup ( C) head Vikram Pandit about a merger. Pandit turned down the proposal, which was made in September, the report said.

Elsewhere on the merger front, CenturyTel ( CTL) reached an agreement to acquire Embarq ( EQ) in a stock swap the companies are valuing at around $11.6 billion.

Also, as the Treasury's $700 billion Troubled Asset Relief Program to buy equity stakes in troubled banks got underway, several companies announced their participation in the initiative. Among them, KeyCorp ( KEY) and Huntington Bancshares ( HBAN) announced they would take part in the Treasury Department's plan to buy stock in banks facing liquidity troubles.

SunTrust ( STI), meanwhile, said it would slash its dividend 30% and apply to sell stock and warrants to the Treasury.

Also making headlines was conglomerate Loews Corp. ( L), which said it will buy $1.25 billion of preferred stock in insurer CNA Financial ( CNA). Loews owns a 90% stake in CNA, which swung to a third-quarter loss because of a downturn in its investment portfolio and hurricane-related claims.

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