REFILE-US STOCKS-Market falls on auto bailout woes
* Investors fret about fate of US auto makers
* GM, Ford shares drop; investors snap up defensive stocks
* Dow off 0.8 pct, S&P 500 off 1.1 pct, Nasdaq off 0.4 pct
* For up-to-the-minute market news, please click on [STXNEWS/US] (Fixes missing word "grew" in first paragraph)
(Updates to late morning)
By Ellis Mnyandu
NEW YORK, Nov 19 (Reuters) - U.S. stocks fell on Wednesday as fears about the diminishing prospects for a U.S. auto industry rescue grew, offsetting some gains in defensive stocks like drugs.
Shares of General Motors GM.N declined nearly 13 percent to $2.69, while Ford (F.N) slid more than 11 percent as investors worried there may be no swift action from Congress as it winds down its session.
The fears about the fate of the U.S. automakers, including Chrysler, are what a possible bankruptcy may unleash on the overall economy.
"There's insecurity with the bailout. The plight of GM, Chrysler and Ford," said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm in Toledo, Ohio. "There's just no catalyst to buy stocks and for the kind of confidence we need for the market to have any sustainable progress."
The Dow Jones industrial average .DJI shed 74.87 points, or 0.83 percent, to 8,354.58. The Standard & Poor's 500 Index .SPX declined 9.81 points, or 1.14 percent, to 849.31. The Nasdaq Composite Index .IXIC fell 12.41 points, or 0.84 percent, to 1,470.86.
With stocks struggling to shake off the gloom that has sent benchmark indexes to their lowest levels since 2003, investors' growing anxiety sent two-year U.S. Treasury yields to a five-year low in search of safe-haven government debt.
Besides auto stocks, financials also took a big beating, with Citigroup (C.N) , sliding more than 3 percent.
U.S. auto executives from GM, Ford and Chrysler warned Congress on Tuesday that their industry was teetering on the brink of disaster as they pleaded for a $25 billion aid package despite political opposition to another multibillion-dollar government bailout. [ID:nN18548335]. More hearings before a House committee are planned for Wednesday.
Investors snapped up such defensive stocks as McDonald's Corp (MCD.N) , up 2 percent, Coca-Cola Co (KO.N) , up 2.3 percent, and drug company Merck (MRK.N) , up about 1 percent.
Defensive plays rose on hopes that despite a slumping economy companies including fast-food chain McDonald's would still be able to sustain business. McDonald's shares jumped to $57.64 on the New York Stock Exchange, while those of beverage company Coca-Cola rose to $44.33.
Shares of Merck, a drug maker, rose to $26.31. Shares of energy companies also underpinned the broader market.
But among the top drags, Citigroup declined to $8.10 on the NYSE, where it hit a session low $7.75 -- its lowest level in 13 years as investors fretted about further fallout for the financial sector from the mortgage crisis. (Reporting by Ellis Mnyandu; Editing by Kenneth Barry)
