Wall Street: Ugly is back

Nasdaq ends at a 6-year low, and Dow and S&P 500 fall to fresh 12-year lows as investors fret about GM, Citigroup and the global economy.

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By Alexandra Twin, CNNMoney.com senior writer

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NEW YORK (CNNMoney.com) -- Stocks plunged to fresh 12-year lows Thursday as investors waded through more grim news: GM said its survival is in doubt, bank shares took a beating, and Citigroup fell below a buck.

Adding to the global woes: China defied expectations by failing to boost its economic stimulus program.

The Dow Jones industrial average (INDU) fell 281 points, or 4.1%, to close at 6,594.44, ending at the lowest point since April 15, 1997. The Dow has now fallen 14 of the last 18 sessions.

The Nasdaq composite (COMP) fell 54 points, or 4% to close at 1,299.59, ending at the lowest point since 1279.24 on March 12, 2003, at the bottom of the previous bear market.

The S&P 500 (SPX) index lost 30 points, or 4.2%, closing at 682.55, the lowest finish since Sept. 18, 1996.

Stocks slipped at the open and kept falling from there, with the selling accelerating as the major gauges failed to hang on to key technical levels that traders watch.

"Once we broke through that 700 level on the S&P, which has been intact since 1996, all the people who were watching it left the building," said Joe Clark, market analyst at Financial Enhancement Group.

He said that with the major gauges at these levels, market pros have even less of a sense of where the so-called bottom is.

Stocks have been sliding on and off since peaking in October 2007 amid the housing and credit market collapse and the onset of the recession - which technically began in December 2007.

But the declines have picked up the pace year-to-date in response to growing pessimism about the economy. As of Thursday's close, the Dow is down almost 25% this year, the worst start in the 113-year history of the Dow.

Since closing at a record 14,164.53 on Oct. 9, 2007, the Dow has fallen 53% as of Thursday's close. Since closing at a record 1,565.15 on Oct. 9, 2007, the S&P 500 has fallen 56% as of Thursday's close.

Since hitting a bull-market high of 2,859.12 on Oct. 31, 2007, the Nasdaq has tumbled 54.5% as of Thursday's close. But the Nasdaq has never come near its record of 5,048.62 hit on March 10, 2000, at the apex of the Internet boom.

Financials: Among the big losers, financials were hit especially hard. Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500), Wells Fargo (WFC, Fortune 500) and Morgan Stanley (MS, Fortune 500) were among the losers. The KBW Bank (BKX) index lost 11.8%.

Citigroup fell for a time below $1 a share, to its lowest level ever at 97 cents, before ending at $1.02. More on Citi from CNNRadio.

JPMorgan Chase (JPM, Fortune 500) tumbled 14% after Moody's lowered its long-term outlook on the company to "negative" from "stable" late Wednesday.

A variety of insurers slipped including Allstate (ALL, Fortune 500), MetLife (MET, Fortune 500), Chubb (CB, Fortune 500), Progressive (PGR, Fortune 500) and Hartford Financial Services (HIG, Fortune 500).

Failed insurance giant AIG (AIG, Fortune 500) slumped 18.6% as U.S. regulators discussed the company's $180 billion bailout in a Senate hearing.

"It's the same old story, with the financial sector continuing to hammer the market," said Steven Goldman, market strategist at Weeden & Co.

"Everybody is so bearish right now that you would expect to be in the midst of a counter-trend rally," he said. "But the implosion in the banking and insurance sectors is just overwhelming."

Stocks managed to snap back from 12-year lows Wednesday on hopes that China would announce that it was increasing the size of its stimulus plan. But the Chinese premier did not announce any boost to the $586 billion plan at a key political meeting in Beijing Thursday. (Full story)

GM: Concerns about the outlook for General Motors also weighed on stocks Thursday. GM said in its annual filing that there is substantial doubt about the automaker's ability to survive.

The company has sustained huge losses over the course of the recession and has already received $13.4 billion in federal loans. GM has said it needs additional federal money to stay afloat. GM (GM, Fortune 500) shares fell 15.5%.

Wal-Mart Stores: The world's No. 1 retailer reported a bigger-than-expected jump in February sales, thanks in part to lower gas prices. Wal-Mart said that sales at stores open a year or more, a retail metric known as same-store sales, rose 5.1% in February versus forecasts for a rise of 2.4%.

Separately, the company said it is boosting its annual dividend by 15% to $1.09 from 95 cents per share. Wal-Mart (WMT, Fortune 500) shares rose 2.6%.

As a result of Wal-Mart, the overall retail sector posted a slight rise in February same-store sales, versus previous forecasts for a decline, according to Thomson Reuters.

Nonetheless, many retailers continued to see weaker sales, due to the impact of the slowing economy and growing joblessness.

Wal-Mart rival Target (TGT, Fortune 500) said sales fell 4.1%, sending shares 3.1% lower.

Abercrombie & Fitch (ANF) said same-store sales plunged 30% in the month, sending shares of the clothing retailer down 13%. Nordstrom (JWN, Fortune 500) said sales fell 15.4%, sending shares of the department store chain down more than 10%.

Gymboree (GYMB) warned late Wednesday that first-quarter profit will miss forecasts and same-store sales in the quarter will slide 20% to 25%. Shares of the children's clothing retailer plunged 27% Thursday.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by more than 12 to 1 on volume of 1.88 billion shares. On the Nasdaq, decliners topped advancers by more than five to one on volume of 2.35 billion shares.

Economy: January factory orders fell 1.9% after dropping 4.9% in the previous month. Economists surveyed by Briefing.com thought orders would fall 3.5%.

The number of Americans filing new claims for unemployment fell to 639,000 last week from 670,000 in the previous week, versus economists' forecasts for a drop to 650,000.

Another report showed that fourth-quarter business productivity was weaker than initially reported, falling at a revised 0.4% annual rate versus the initially reported 3.2% annual rate. Economists thought it would grow at a 1.1% annual rate.

Bonds: Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.81% from 2.98% Wednesday. Treasury prices and yields move in opposite directions.

Lending rates were little changed. The 3-month Libor rate held steady at 1.28%, unchanged from Wednesday, while the overnight Libor rate rose to 0.32% from 0.31%, according to Bloomberg.com. Libor is a bank-to-bank lending rate.

Other markets: In global trading, most Asian markets ended lower with the exception of the Japanese Nikkei. European markets tumbled.

In currency trading, the dollar gained versus the euro and fell against the yen.

U.S. light crude oil for April delivery fell $1.77 to settle at $43.61 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery rose $21.10 to settle at $927.80 an ounce.

Talkback: Are you living on your unemployment check? How are you making ends meet? What bills are you paying - and which ones are sliding? E-mail your story to realstories@cnnmoney.com and you could be part of an upcoming article. To top of page

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