US stocks fell on Wednesday as a glum profit forecast from Kraft Foods signaled consumers are skimping even on the basics and investors worried that government efforts to rescue banks could wipe out their shareholders.
Shares of Kraft, the top North American food maker, tumbled more than 9% and were the top drag on the Dow, followed by Walt Disney Co, which fell nearly 8% a day after reporting a slide in quarterly profit.
Costco Wholesale Corp dropped almost 7% after the largest US warehouse club warned quarterly earnings would fall short of Wall Street's forecasts.
Shares of Bank of America plunged 11.% to $4.70, capping a fifth straight day of declines and touching a 19-year low during the session, as investors fretted about the uncertainty of how a government plan to relieve banks of money-losing assets would work.
Of particular concern is that the plan could wipe out current stockholders, traders said. The Obama administration is due to make an announcement on its bank rescue plan next week.
The Dow Jones industrial average fell 121.70 points, or 1.51%, to 7,956.66. The Standard & Poor's 500 Index shed 6.28 points, or 0.75%, to 832.23.
A report showing that the vast service sector shrank less than expected in January spurred technology gains helped the Nasdaq finish near break-even.
The Nasdaq Composite Index dipped 1.25 points, or 0.08%, to 1,515.05.