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US stocks tumble on GM fate, financial woes

(Xinhua)
Updated: 2009-03-06 09:28

NEW YORK - US stocks tumbled with all major indexes losing more than 4 percent on Thursday as market speculated that General Motors Corp. may face bankruptcy and financial shares sank on downgrading worries.

A trader sits alone on the floor of the Chicago Mercantile Exchange March 5, 2009, 2009. [Agencies]

In a report released Thursday, auditors of General Motors have raised "substantial doubt" about the troubled automaker's ability to continue operations, and the company said it may have to seek bankruptcy protection if it can't execute a huge restructuring plan.

Related readings:  GM's future hanging by a thread  GM reports second largest annual loss  GM shares hit 74-year low  GM to axe 47,000, seeks $16.6b more

Financial shares led the way down. Moody's warned that it would downgrade the credit ratings for Wells Fargo and Bank of America Corp. Wells Fargo shares plunged 15.94 percent and Bank of America tumbled 11.70 percent.

Moreover, shares of Citigroup, once the world's most valuable bank, plummeted below 1 dollar on Thursday, as investors continued to worry about the bank's health and ability to avert nationalization.

The US Labor Department said Thursday that productivity, the amount of output per hour of work, fell at an annual rate of 0.4 percent in the fourth quarter, worse than economists' expectations.

Another government report showed that the number of people claiming unemployment benefit dropped more than expected last week. The US Labor Department reported that the number of new jobless benefit application fell to 639,000 from the previous week's figure of 670,000. Analysts expected a smaller drop to 650,000.

Meanwhile, retail sales improved in February with discounted chain store like Wal-Mart gaining far more than analysts had expected.

The Dow Jones average fell 281.40, or 4.1 percent, to 6,594.44. The S&P 500 index dropped 32.95, or 4.6 percent, to 679.92, the lowest since Oct. 1996. The Nasdaq composite index fell 54.15, or 4 percent, to 1,299.59.

Traders react in the S&P 500 pit at the Chicago Mercantile Exchange March 5, 2009, 2009. [Agencies]

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