That gasping sound you heard at about 10:00 a.m. EDT on Monday was Wall Street's reaction to a report on U.S. factory activity, which crashed to its lowest level since the recession ended.

After the report, the "R" word -- "recession" -- was being whispered again on Wall Street.

"Cue hysteria," Ian Shepherdson, chief U.S. economist at the research firm High Frequency Economics, wrote in an email.

He and other economists rushed to reassure everybody that the factory number wasn't signaling a recession. But they were also clearly worried that the economy has at least hit a dangerously slow pace, leaving it vulnerable to a shock.

The Institute for Supply Management said its measure of factory activity tumbled to 49.7 in June from 53.5 in May. Any number above 50 means the factory sector is expanding. Any number below it means the sector is shrinking.

This was the first time the index showed shrinkage since July 2009, the ISM said. The primary culprit is likely the recession in Europe, which is leading to a slowdown in factory output around the world.

The news pushed U.S. stocks lower, with the Dow Jones Industrial Average recently down about 70 points.

"Despite the decline of manufacturing’s importance to the U.S. economy, the ISM Manufacturing Index remains a premier economic indicator and a reading below 50 in June is incredibly, incredibly worrisome," Dan Greenhaus, chief global strategist at New York brokerage firm BTIG, wrote in an email with the subject line: "Uh Oh. Recession Coming?"

Maybe more worrisome was the ISM's reading on new factory orders, which plunged to 47.8 from 60.1 -- the worst one-month decline since the terrorist attacks of 9/11. This is a leading indicator of factory activity, and it is not singing a happy song right now.

On the bright side, the ISM's employment index was little changed, at a strong 56.6. The bad news is that this index tends to lag, some economists said.

The ISM and several economists pointed out that the broad economy can keep growing even when the relatively small factory sector is not. Economists agree that the breakeven for an ISM recession signal is more like 47, or maybe 44.

"We see it as a slowdown," wrote independent economist Robert Brusca, "not something worse."

The ISM said its factory reading translates into U.S. GDP growth of about 2.4 percent. That may be a little optimistic -- Paul Dales, senior U.S. economist at the research firm Capital Economics, said the ISM reading was consistent with GDP growth of about 1 percent.

In either case, that is no recession -- which typically involves a shrinking of the GDP.

But it is still an uncomfortably slow pace of growth, making it even harder to bring down unemployment, which still hovers at more than 8 percent. The Bureau of Labor Statistics is due to report July unemployment data on Friday. After Monday's weak ISM data, Wall Street is starting to brace for another weak jobs report, too.