Retail sales data failed to boost the market. According to preliminary calculation by RCT Shopper Trak, a research firm that tracks total retail sales at more than 50,000 outlets, sales rose slightly on Black Friday, which is traditionally one of the biggest shopping days of the year, showing that consumers are cautious as the economy slows down.

Anxiety about the economy also weighed on stocks. The US Institute for Supply Management posted its index of manufacturing activity fell to a 26-year low in November. Meanwhile, the US Commerce Department said construction spending dropped by 1.2 percent in October, bigger than the 0.9 percent decline analysts had expected.

The National Bureau of Economic Research (NBER), a private nonprofit research organization, announced yesterday that US economy has been in a recession since December 2007.

"The peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months," NBER said in a statement.

The Dow Jones industrial average fell 679.95, or 7.70 percent, to 8,149.09. The Standard & Poor's 500 index dropped 80.03, or 8.93 percent, to 816.21, while the Nasdaq composite index fell 137.50, or 8.95 percent, to 1,398.07.