Stocks slid on Thursday, hit by persistent worries about major banks, including Citigroup
Grim economic reports signaling more fallout from the recession added to the negative tone as major indexes traded around 12-year lows, offsetting positive same-store sales and a 15 percent rise in the dividend of Wal-Mart Stores
Worries about the financial system's health hit bank stocks again as investors focused on the possibility that troubles in the finance arm of General Electric <
GE's stock gained 0.3 percent to $6.71, but the exposure to General Electric throughout the U.S. banking system remains a significant concern.
The loss of confidence is pervasive. There isn't any magic bullet here that's going to save Citi or Bank of America. The only thing that might save them is if the government comes in and sponsors a bankruptcy, said John Schloegel, a vice president of Capital Cities Asset Management in Austin, Texas.
Until we have some meaningful discussion about doing the right things instead of just throwing money at things like AIG and General Motors, we're not going to solve the crisis we're in.
The Dow Jones industrial average <.DJI> dropped 209.08 points, or 3.04 percent, to 6,666.76. The Standard & Poor's 500 Index <.SPX> slid 23.69 points, or 3.32 percent, to 689.18. The Nasdaq Composite Index <.IXIC> fell 37.08 points, or 2.74 percent, to 1,316.66.
Shares of embattled automaker GM fell 17.3 percent to $1.82 after it said if debtor-in-possession financing was unavailable, it would be forced to liquidate under Chapter 7 of the U.S. bankruptcy code.
Investors worry that GM's demise would send shock waves through the already battered U.S. economy, given that it is a major employer and buyer of supplies from auto parts makers.
Among other drags were shares of big manufacturers like 3M Co
Investors had bet on Wednesday on news of a Chinese stimulus plan, but Premier Wen Jiabao, speaking to parliament on Thursday morning, did not announce any expansion of China's 4-trillion-yuan ($585 billion), two-year package.
But on the upside, shares of Wal-Mart
Economic news included a report that showed new orders received by U.S. factories fell for a sixth straight month in January.
The Mortgage Bankers Association said on Thursday that one in every eight U.S. households with mortgages, a record share, ended 2008 behind on their mortgage payments or in foreclosure as job losses intensified a housing crisis created by lax lending practices.
The Dow Jones index of home builders' shares <.DJUSHB> was down 1.9 percent.
(Additional reporting by Leah Schnurr; Editing by Jan Paschal)