Stocks drop on recession fears, Citigroup cuts

U.S. stocks fell today on fears of a global recession while Citigroup Inc. announced plans to cut 52,000 jobs.

The Dow Jones industrial average closed down 223.73, or 2.63%, at 8,273.58; the S&P 500 fell 22.54, or 2.58%, ending at 850.75; and the Nasdaq composite closed down 34.8, or 2.29%, 1,482.05. All numbers are preliminary.

Citigroup CEO Vikram Pandit forecast a reduction of 52,000 jobs in a web-based “town hall meeting” presentation to employees. Citigroup plans to bring its global staff to 300,000 on the near-term, down from 352,000 in the third quarter and down from 375,000 at its peak in 2007, the presentation showed.

The Citigroup cuts will bring to about 210,000 the number of jobs lost in the banking sector worldwide since the credit crisis started 15 months ago.

Meanwhile, Goldman Sachs Group confirmed that its seven top executives will forgo bonuses this year as the firm is expected to report its first quarterly loss ever.

Japan reported overnight it has entered its first recession since 2001 as the world’s second-largest economy contracted by 0.4% in the third quarter after shrinking 3.7% in the previous quarter. Last week, Germany, the world’s third-largest economy, already had reported being in a recession. The 15-country eurozone is expected to report the same when the group releases economic data Friday.

Also today, the Confederation of British Industry forecast the recession will last through 2009 in the U.K.

“It’s a broad-based downturn,” David Resler, chief economist at Nomura Securities International in New York said, estimating that the U.S. economy experienced a steep contraction in the fourth quarter.