US stocks fell sharply on Monday, snapping a five day rally, after National Bureau of Economic Research officially declared that United States entered recession in December 2007. Gloomy economic data spurred fears of a deeper and longer recession.

The Dow Jones Industrial Average plunged 679.95 points, (-7.70%), to 8,149.09. The S&P 500 slumped 80.03 points (-8.93%) to 816.21. The Nasdaq Composite fell 137.50 points (-8.95%) to 1,398.07.

Cambridge, Massachusetts National Bureau of Economic Research, a private, nonprofit group of economists said on Monday that U.S. has been in a recession since December 2007.The committee identified December 2007 as the peak month, after determining that the subsequent decline in economic activity was large enough to qualify as a recession. The NBER announced that December 2007 marked the end of a 73 month expansion in US. The previous cycle of economic expansion, which ended in 2001, lasted 120 months or 10 years.

A release by Institute for Supply Management on Monday showed manufacturing activity in United States dropped to 36.2% in November, down 2.7% from October's reading of 38.9%. This is the lowest level for the index since May 1982. Economists had forecast a drop to 37% in November. A reading below 50 indicates a contraction in manufacturing activity while above 50 indicates expansion.

A separate release by Department of Commerce showed construction spending in US fell 1.2% in October, more than the 1% drop anticipated by Wall Street.

US Fed chairman Ben Bernanke said on Monday the economy “will probably remain weak for a time,” even if the credit crisis eases. Bernanke suggested that further cuts in key interest rates beneath the Fed's current target of 1% were "certainly feasible." "Although conventional interest rate policy is constrained by the fact that nominal interest rates cannot fall below zero, the second arrow in the Federal Reserve's quiver -- the provision of liquidity -- remains effective," he said.

Treasury Secretary Henry Paulson meanwhile said that the federal government is looking to expand the $700 billion financial rescue program.

Financials suffered the most in Monday's selloff. Citigroup (NYSE: C) plummeted $1.84 or 22.2% to $6.45. Bank of America Corp. (NYSE: BAC) sank $3.40 or 20.92% to $12.85. J.P Morgan (NYSE: JPM) subtracted $5.60 or 17.69% to $26.12.On Monday, JPMorgan Chase & Co said it will cut about 9,200 jobs at the former Washington Mutual Inc. Goldman Sachs (GS) and Morgan Stanley (MS) retreated 13.23% and 23.05% respectively.

American Express Company (NYSE: AXP) lost $3.67 or 15.74% to $19.64.

General Motors Corp. (NYSE: GM) tumbled 65 cents or 12.4% to finish at $4.59.

The second-largest U.S. automaker Ford Motor Co. (NYSE: F) said on Monday that it is mulling the sale of its European brand Volvo.