U.S. Stocks Tumble into the Red Zone in Afternoon Trade

The S&P 500 sank 5.6 percent to 845.80 at 2:34 p.m. in New York. The Dow Jones Industrial Average fell 415.68 points, or 4.7 percent, to 8,413.36. The Nasdaq Composite Index declined 5.9 percent to 1,444.92.

The National Bureau of Economic Research said the economy entered a recession in December 2007, confirming what most people already knew and feared. The S&P 500 is down 42 percent this year as credit losses and writedowns at the world's largest financial firms approach $1 trillion.

Economists are increasingly forecasting that the economic slump will be one of the worst in the postwar era.

General Motors (NYSE: GM) and Ford (NYSE:F) the automakers said to be teetering on collapse gained after reports in the Financial Times said the companies have approached the Swedish government about aid for their Saab and Volvo brands.

Citigroup (NYSE:C) is reportedly considering selling NikkoCiti, its Japanese trust company, in a move that will raise the struggling bank up to $420 million.

Internet company Yahoo (NASDAQ:YHOO) fell after the Times of London reported Microsoft (NASDAQ:MSFT) is in talks to buy the Internet giant's online search business in a complicated $20 billion deal. Meanwhile, a popular tech blog -- AllThingsDigital -- said a key executive are in a new management team as saying the report is "total fiction."

Meanwhile, the energy market also suffered a pullback Monday as crude oil futures hit one-week lows, tumbling below the $50 a barrel level. In recent trading, crude oil was down $4.41 to $50.02 a barrel.