Stocks dive toward multiyear lows

NEW YORK - Investors around the world are betting that even with government stimulus and bailout programs, the global recession will just have to run its course.

The problems that slammed stocks last year -- ailing banks, foundering automakers, tumbling home prices and cash-strapped consumers -- haven't let up. Instead, the issues have festered, and are threatening to push U.S. stocks back to levels not seen since the late 1990s.

As President Obama signed his $787 billion stimulus bill and automakers scrambled to come up with restructuring plans, the Dow Jones industrial average closed down 297.81 points, or 3.79 percent, at 7,552.60 -- just 31-hundredths of a point above its post-meltdown Nov. 20 close of 7,552.29, which was its lowest close in 5 1/2 years.

The drop on Wall Street followed sharp pullbacks on overseas exchanges.

"We don't think the recession's over until at least the middle of the year, and that's even starting to seem very early," said J.P. Morgan Chase equities anayst Thomas J. Lee, adding that the market's worries are "nothing new -- the magnitudes are worse."

Wall Street is waiting for more specifics from the government before investors can adequately assess when to expect growth again.

Obama is scheduled to discuss a program today on preventing foreclosures, but investors are particularly anxious for details from the Treasury Department about its newest rescue plan for the troubled banking sector.

The Standard & Poor's 500 index, which fell 37.67, or 4.56 percent, to 789.17 Tuesday, came within 48 points of its 11-year low of 741.02.

The Nasdaq composite index fell 63.70, or 4.15 percent, to close at 1,470.66.

On Tuesday, Wall Street got another dose of grim economic news -- the New York Federal Reserve said its regional index of manufacturing activity is showing the sharpest contraction in February since it started the gauge in 2001.