Dow Ends Below 6,600; Citi Dips Below $1

Stocks tumbled 4 percent Thursday as investors were rattled by doubts about the survival of General Motors and Citigroup broke below $1.

The Dow Jones Industrial Average dropped nearly 300 points, or 4.1 percent, ending below 6,600 for the first time since April 1997. That erased all of the gains from the previous session's rally — and then some.

Twenty-two of the 30 Dow components hit new multi-year lows today.

Citigroup dipped below $1 as investors worry about the viability of the bank and the potential for nationalization, before settling at $1.02.

Bank of America shares tumbled 12 percent to close at $3.17 after Change to Win, a group that works with union-affiliated pension funds, called for the ouster of CEO Ken Lewis.

And seven top executives at Merrill Lynch received subpoenas from New York Attorney General Andrew Cuomo, sources familiar with the investigation told CNBC. The investigation deals with bonus payments made in the run up to Bank of America's takeover of Merrill last year.

Elsewhere in the financial sector, Wells Fargo and JPMorgan Chase fell 16 percent and 14 percent, respectively, after Moody's raised questions about the banks' ratings, indicating they could be lowered in the near future.

General Motors shares dropped 16 percent, ending below $2 after the automaker said its auditors have again raised questions about its sustainability.

Ford shares fell 3.2 percent after the automaker said it would eliminate up to $10.4 billion of its debt by offering debtholders cash and stock instead. And Ford supplier Visteon got a vote of confidence after Ford CEO Alan Mulally said there were no plans to change its arrangement with the former affiliate.

General Electric shares fell 0.5 percent despite an assurance from the CFO said on CNBC that concerns over credit exposure from GE Capital were overblown. (GE is the parent of CNBC.)

GE stock has lost so much value that the conglomerate, which once boasted a market cap of half a trillion dollars, is now in danger of falling out of the top 20 biggest companies on the S&P 500. GE's market cap was $70.6 billion as of yesterday's close.

>> The Top 25 Companies by Market Cap

Retail sales remained weak in February but came in better than expected, helped by tighter inventories and milder weather. 

Wal-Mart was one of two gainers on the Dow, climbing 2.6 percent, after the discount giant reported its same-store sales jumped 5.1 percent, more than double of what analysts had expected, and raised its dividend.

Rival Target said its same-store sales fell 4.1 percent, but that was still better than expected.

In other news, Venezuela's President Hugo Chavez pushed on with his so-called socialist revolution by seizing control of a unit of American food giant Cargill. The move is a bid to guarantee low costs on food staples like rice.

China's ambitious government spending plan had juiced markets world-wide on Wednesday but the effect began to peter out Thursday amid disappointment in a lack of specific spending announcements.

In tech land, Google plans to hoard cash as it battles with the economic downturn, but doesn’t expect the move to hurts revenues, Chief Executive Eric Schmidt said. The Internet search giant plans to build an $8.6 billion cash cushion for “very conservative investments” only.

One bright spot on the economic front: Jobless claims dropped by 31,000 last week to 639,000, better than the 650,000 economists had expected. Continuing claims dropped by 14,000 to 5.11 million.

Meanwhile, productivity showed a worse-than-expected decline for the fourth quarter, while wages pressures increased significantly. Factory orders fell for a sixth straight month in January.

Investors will be watching two hearings on Capitol Hill: The Senate Banking Committee will assemble to discuss what went wrong with insurance giant AIG and the House Budget Committee will hold a hearing with testimony from Timothy Geithner on President Barack Obama's fiscal 2010 budget.

>> Watch the live streaming video of the AIG hearing

And Atlanta Federal Reserve President Dennis Lockhart will speak about the economic outlook at 12:45 pm in Atlanta, Georgia.

Wall Street also was watching foreign banking moves with some interest. The Bank of England slashed interest rates to a record 0.5 percent and the European Central Bank cut its key rate to 1.5 percent.

This Week:

THURSDAY: ExxonMobil analyst meeting; Senate hearing on AIG; Geithner testifies at House budget hearing; Fed's Lockhart speaks
FRIDAY: Jobs report; consumer credit

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