Stock markets pummelled

And October is supposed to be over. Bloomberg reports:

U.S. stocks tumbled, led by the steepest drop in financial companies in five years, after analysts said Citigroup Inc. may be short of capital and advised investors to sell the shares.

Citigroup, the biggest U.S. bank by assets, slid the most since 2002 after CIBC World Markets said its dividend may be cut and Credit Suisse Group reduced its rating. Bank of America Corp., the second largest bank, had its biggest decline in four years. Retailers fell, led by Target Corp., after consumer spending slowed more than economists forecast.

The Standard & Poor's 500 Index lost 40.94, or 2.6 percent, to 1,508.44, erasing about $369 billion of market value from the benchmark for American equities. Financial shares, this year's worst-performing industry, led the slide with a 4.6 percent retreat, the most since September 2002. The Dow Jones Industrial Average decreased 362.14, or 2.6 percent, to 13,567.87. The Nasdaq Composite Index slipped 64.29, or 2.3 percent, to 2,794.83. More than 13 stocks fell for every one that rose...

The S&P 500 lost the most since Aug. 9. Citigroup's downgrades also triggered selling in Europe, where the Dow Jones Stoxx 600 lost 1.5 percent to 382.57. Treasuries rallied, erasing losses spurred by the Federal Reserve's interest-rate cut yesterday, as investors sought the safety of government debt.

Yesterday's economic data weren't helpful to the stock market. From Bloomberg:

The U.S. economy is cooling after a surge in the third quarter, according to the latest reports on manufacturing and consumer spending that back the Federal Reserve's move yesterday to cut interest rates.

The Institute for Supply Management's factory index fell to 50.9 in October, the lowest in seven months, from 52 in September and less than economists anticipated. Americans increased spending 0.3 percent in September, the Commerce Department said today in Washington, also less than forecast...

The spending report showed incomes increased 0.4 percent in September for a second month. The gain matched the median forecast of economists surveyed.

The report's price gauge tied to spending patterns and excluding food and energy costs, the Fed's preferred measure, rose 0.2 percent in September after a 0.1 percent gain the previous month. It was up 1.8 percent from September 2006, matching the August increase as the smallest since early 2004...

Adjusted for prices, spending rose 0.1 percent in September, the smallest gain since June, after a 0.6 percent increase the prior month, the report showed.

The UK economy also appears to be slowing. From Reuters:

The manufacturing purchasing managers' index compiled by the Chartered Institute of Purchasing and Supply/NTC showed activity eased to its slowest rate this year in October.

The headline index fell to 52.9, its second consecutive monthly decline and well below forecasts for a reading of 54.4. There were marked falls recorded in output, new orders and employment...

A survey by the Confederation of British Industry also painted a subdued picture, showing retail sales growth slowed in October to its slowest rate since last November.

The CBI attributed the slowdown to higher borrowing costs and uncertainty caused by turmoil on financial markets.

And even China provided a mixed outlook for its manufacturing sector. From Bloomberg:

The Purchasing Managers' Index rose to 55.2, a 31-month high, from 55 in September, CLSA said today in an e-mailed statement...

A government PMI survey, released by the China Federation of Logistics and Purchasing and the National Bureau of Statistics earlier today, showed a lower reading. Its index dropped to 53.2 in October from 56.1 in September.