Stocks fell yesterday in selling driven by more companies warning about softening results, though a late-day bounce helped the market to finish above session lows. Losses were concentrated in the technology, consumer and financial sectors, while utility stocks rose following the recent slump, which was related to the California power crisis.

Sounding the slowdown alarm was leading Wall Street firm Morgan Stanley Dean Witter. The firm's chief economist, Stephen Roach said the slowing US economy would slip into recession in the first half of 2001, snapping its longest expansion in history.

In the first prediction of an imminent recession by a major Wall Street house, Mr Roach said US gross domestic product (GDP) would shrink by an annual rate of 1.25 per cent in the first half of 2001.

The market's weakness followed Friday's slide in the Nasdaq of 160 points and the Dow's 250-point drop.