US stocks slid on Thursday with the Dow and S&P falling to 12-year lows as General Motors' warning of possible bankruptcy and concerns about the banking system's fate reinforced investors' reluctance to take on risk.
The previous session's rally proved fleeting as worries about the financial system's health hit bank stocks again and investors focused on the possibility that troubles in the finance arm of widely held General Electric could lead to a debt rating downgrade for the entire company.
Uncertainty about the exposure of US banks to GE remained a significant concern and the S&P financial index fell nearly 10%.
Shares of Citigroup, once the world's largest bank by market value, fell as low as 97 US cents during the session, trading below $US1 for the first time. Anxiety rose over whether the bank can be restored to health or whether it will have to be taken over by the government.
General Motors shed 15.5% to $1.86 after its auditors raised "substantial doubt" about the automaker's viability if it fails to head off losses and stop burning through cash.
The Dow Jones industrial average fell 281.40 points, or 4.09%, to 6,594.44. The Standard & Poor's 500 Index lost 30.32 points, or 4.25%, to 682.55. The Nasdaq Composite Index dropped 54.15 points, or 4.00%, to 1,299.59.
