US STOCKS-Market falls on economic, auto bailout anxiety
* Dow off 2.6 pct, S&P 500 off 3.7 pct, Nasdaq off 3.8 pct
* Fed cuts growth forecasts
* Automakers plunge on bailout worry
* For up-to-the-minute market news, please click on [STXNEWS/US] (Updates to midafternoon, changes byline)
By Leah Schnurr
NEW YORK, Nov 19 (Reuters) - U.S. stocks fell on Wednesday as financial shares tumbled and uncertainty over a possible rescue for the U.S. auto industry fueled concerns about the deepening economic slump.
Adding to the gloom, the Federal Reserve slashed its economic growth forecasts through 2009 and minutes from the Fed's most recent policy meeting showed officials believed more interest rate cuts may be needed as the economy falters.
"It's certainly the Fed confirming what the market has realized -- that the recession is here," said Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston.
Shares of General Motors GM.N dove more than 15 percent to a 66-year low, while rival Ford (F.N) slumped to a 26-year low as investors worried about the possibility that there will be no quick proposal from Congress to resolve the problems hounding the industry before its session draws to a close.
U.S. auto executives were on Capitol Hill for a second day to plead their case for a $25 billion aid package. Prospects for a bailout have been uncertain but legislators have begun to talk about crafting some sort of deal. See [ID:nN19320198].
Investors are concerned about how a possible bankruptcy for U.S. automakers could further hurt an already fragile economy.
The Dow Jones industrial average .DJI slid 215.85 points, or 2.56 percent, to 8,208.90. The Standard & Poor's 500 Index .SPX lost 31.66 points, or 3.69 percent, to 827.46. The Nasdaq Composite Index .IXIC gave up 57.02 points, or 3.84 percent, at 1,426.25.
The benchmark S&P 500 index was close to testing the more than five-year intraday low that was hit last week.
Financials slumped on persistent worries about the fallout that worsening credit and a contracting economy will have on banks. Bank of America (BAC.N), JPMorgan Chase & Co (JPM.N) and Citigroup (C.N) all slid to multiyear lows. Bank of America was down 11.1 percent at $13.50, JPMorgan shed 9 percent to $29.26 and Citigroup lost 14.2 percent to $7.17. [ID:nN19288803].
The S&P financial index .GSPF tumbled 7.4 percent.
Adding to concerns, spreads on bonds with exposure to commercial real estate surged on worries that the ailing economy could lead to a round of defaults on loans for office buildings, retail stores and hotels. [ID:nN19334285].
Shares of GM were down 15.9 percent at $2.60, and Ford slid 24.4 percent to $1.27.
On the economic front, U.S. consumer prices fell at a record pace in October and home building sagged to new lows, according to data that suggested the economy is already in a recession that could become prolonged. [ID:nN19322315].
On Nasdaq, Yahoo Inc (YHOO.O) slid 15.3 percent to $9.78 after Microsoft Corp's (MSFT.O) chief executive ruled out an acquisition of the Internet media company, saying his company was interested in restarting talks on a Web search partnership. [ID:nN19338410].
Yahoo had earlier fallen as far as $9.24, a more than five-year low. (Editing by James Dalgleish)
