NEW YORK — Investors retreated from Wall Street again, driven by worries about the nation’s big banks and General Motors.
Stocks slid to their lowest levels in more than 12 years Thursday, more than wiping out the previous session’s rally.
Investors wrestled with relentless uncertainty about the financial system and fresh concerns about GM. Short- selling — bets that stocks will fall — ahead of the government’s employment report today exacerbated the losses, slashing 281 points from the Dow Jones industrials and sending all the major indexes down more than 4 percent.
Stocks fell in every industry, with beleaguered banks posting some of the steepest drops. Citigroup, still shaky despite receiving billions in government aid, at times sank below $1 and finished down 9.7 percent at $1.02.
GM, meanwhile, ended with a loss of 15 percent at $1.86 as it warned of possible bankruptcy.
“Citigroup going below a buck today was a little scary,” said Mark LeStrange, director of sales at Source Trading. “To say that we’re cheap here and it’s a good value, it sounds right, but in all reality we could go 50 percent lower.
“Nobody has any idea how low we can go.”
The Standard & Poor’s 500 index is down 56.4 percent from its peak in October 2007, making it the second-worst slide for the index since its plunge of 86.2 percent from 1929 to 1932.
The latest torrent of selling came ahead of the February Labor Department report, likely to show hundreds of thousands of jobs were lost.
Reports showing better- than-expected retail sales and factory orders Thursday weren’t enough to stoke investor confidence. Short-sellers also dragged on the market, analysts said. Short-sellers place bets that a stock will fall, and rising short positions on a stock can intensify its decline.
The Dow fell 281.40, or 4.1 percent, to 6,594.44, its lowest close since April 1997.
Broader indicators also tumbled. The S&P 500 dropped 30.32, or 4.3 percent, to 682.55, its lowest close since September 1996. The Nasdaq composite fell 54.15, or 4 percent, to 1,299.59.
The Russell 2000 index of smaller companies fell 21.85, or 5.9 percent, to 349.45.
“With all the uncertainty that has been created, long- term investors are not stepping in,” said Robert Pavlik, chief market strategist at Banyan Partners in New York. “What incentive do long-term investors have stepping in? Traders rule the roost.”
Stocks fell initially after China deflated investors’ hope that it would take new steps to stimulate its economy, but the discouraging economic data sent stocks even lower.
The hope that China would unveil more government spending to help its economy was a major factor behind the market’s bounce Wednesday, which sent the Dow Jones industrials up nearly 150 points after a five-day slide.
“It’s been this continuous (cycle of) hope leads to disappointment,” said Todd Salamone, senior vice president of research, Schaeffer’s Investment Research in Cincinnati.
