New signs of global downturn drive flight from stocks

Some on Wall Street are looking to Washington for even further action -- possibly including another huge spending package.

Signs of economic contraction came Friday from several continents, providing fresh evidence that the meltdown that originated in the collapsing U.S. housing market is having repercussions all over.

Britain reported its first decline in economic output since 1992, while Japan's Sony and German carmaker Daimler reported bad news about their earnings. In the U.S., Chrysler said it was laying off a quarter of its white-collar staff.

High-profile U.S. companies such as Microsoft and Amazon.com have offered gloomy near-term outlooks for their businesses.

Key stock indexes plunged almost 10% in Tokyo, 8% in Hong Kong, 7% in Sao Paulo, Brazil, and 5% in London and Frankfurt, Germany.

In the U.S., the Dow Jones industrial average sank 312.30 points, or 3.6%, to 8,378.95, capping a volatile week and putting the blue-chip gauge on track for one of its worst months ever, with a decline of 23% thus far in October.

The economic gloom sent the price of oil down $3.69 to $64.15 a barrel, its lowest price in 16 months, on the expectation that energy demand from consumers and businesses will sink.

Stock investors consoled themselves with the thought that Friday's losses on Wall Street could have been steeper. The Dow dropped more than 500 points soon after the opening bell before erasing some of that decline.

"It feels weird to say you feel good about a day when you're down" that much, said Michael Mullaney, portfolio manager at Fiduciary Trust Co. in Boston. "But that's the way things are now."

The unrelenting bear market has some investors hoping that another interest rate cut by the Federal Reserve next week will help bail out their sinking portfolios. Some on Wall Street are calling for even bolder action.

"A large fiscal stimulus package of $300 billion to $500 billion appears to be required to prevent an even deeper economic slump than the one we're now forecasting," analysts at Goldman Sachs wrote in a report to clients Friday.